CANADA: PM-Deep Negotiations Ongoing w/US & Restarting Broad Engagement w/China

• Treasuries have on the whole pushed back to pre-retail sales levels, having sold off on the stronger than expected release before what was a hard to square away rally shortly after.
• The recent losses go against S&P 500 futures holding and recently extending their intraday decline, after earlier losses initially appeared to be supporting the bid in bonds.
• TYZ5 is back to 113-12+ (-02+) from an earlier high of 113-18, having seen a post-0830ET data low of 113-08+. Cumulative volumes are on the low side again, having just nudged over 800k.
• Resistance remains at 113-29 (Sep 5 high), as part of a bullish trend sequence, whilst support is seen at 112-25+ (20-day EMA).
• Cash yields range from 1bp lower (2s) to 1bp higher (10s and 20s) on the day, with 20s continuing to modestly underperform with upcoming supply.
• $13bn 20Y re-open at 1300ET (912810UN6). Last week’s 30Y auction was on the screws but with stronger details. That’s in contrast to last month’s 20Y auction which was in-line but with the bid-to-cover slipping from 2.79 to 2.54 and indirect take-up dropping from 67.4% to 60.6%.
• Beyond retail sales, the day’s data was mixed with stronger import prices partly offset by further large downward revisions to prior months, with a similar story for IP and a surprisingly soft NY Fed services survey. 

European officials and parliamentarians look at the implications of ETS2 CO2 trading rules for inflation. -- On MNI Policy MainWire now, for more details please contact sales@marketnews.com

The Atlanta Fed's latest GDPNow estimate for Q3 jumped to 3.41% from 3.09% in the last full update on September 10 (and 3.3% posted in Q2). This was very much a domestic demand-driven upgrade, with real PCE now seen contributing well over half of growth (1.85pp vs 1.54pp in the previous estimate) thanks to better-than-expected advance retail sales.

• The underlying details from the GDPNow estimate imply final sales to private domestic purchasers, closely watched by the Fed, is growing at around 2.4%, a pickup after 1.9% in both Q1 and Q2.
• "After recent releases from the US Census Bureau, US Bureau of Labor Statistics, and Treasury's Bureau of the Fiscal Service, the nowcasts of third-quarter real personal consumption expenditures growth and real gross private domestic investment growth increased from 2.3 percent and 6.2 percent, respectively, to 2.7 percent and 6.9 percent, while the nowcast of the contribution of net exports to third-quarter real GDP growth decreased from 0.23 percentage points to 0.08 percentage points."
• The next release will be Wednesday after housing starts/permits data.