The tone in equity markets this morning is positive

Posted: Monday, February 12, 2018 - 09:42 EST

The tone in equity markets this morning is positive compared with the large volatility witnessed last week.  Most European equity markets are up over 1% while North American equity futures are pointing towards a higher open as well.  Most of the sell-off last week was related to global worries of higher interest rates as 10-year U.S. Treasury yields ended the week flat at 2.85%.  However, yields in Canada and the U.S. are tracking a couple basis points higher as a result of the positive tone. The 10yr-30yr yield curve in Canada has steepened over the past week by 7bps and currently stands at 14bps, which will temporarily diminish worries around an inverted curve.  The economic calendar in Canada is light this week while the U.S. will see CPI and retail sales data on Wednesday.

Scotiabank announced this morning that it plans to acquire Jarislowsky Fraser for approximately $950 million.  Jarislowsky Fraser has more than $40 billion of assets under management and the combined entity, with Scotiabank, will become the third largest active asset manager in Canada with $166 billion AUM.  This marks the second large transaction by Scotiabank over the past several months who maintains the strongest CET1 ratio of the big six Canadian banks as of year-end.  Volatility remained in Canadian corporate credit spreads on Friday, as spreads tightened in to end the day following the morning sell-off. 

Equity Markets:

 

  Index Level % Change QTD YTD Q3 2016 Q4 2016 Q1 2017 Q2 2017 Q3 2017 Q4 2017
S&P 500 2,619.55 1.49% -1.84% -1.84% 3.85% 3.82% 6.07% 3.09% 4.48% 6.64%
TSX

15,034.53

-0.21% -7.06%

-7.06%

5.45% 4.53% 2.41% -1.64% 3.68% 4.44%

Rates:

 

Today

% Change

QTD change

YTD change

Sept 30 2016

Dec 31 2016

Mar 31 2016

June 30 2017

Sept 30  2017

Dec 31  2017

Canada 5 Year

2.083%

-0.03% 0.22% 0.22% 0.615% 1.150% 1.119% 1.393% 1.753% 1.866%
Canada 10 Year 2.354% -0.02% 0.31% 0.31% 0.990% 1.750% 1.625% 1.762% 2.099% 2.045%
Canada 30 Year 2.502% 0.00% 0.24% 0.24% 1.658% 2.350% 2.302% 2.148% 2.472% 2.266%
30yr Generic Corporate A rated Spread 1.210% 0.00% 0.00% 0.00% 1.530% 1.390% 1.330% 1.210% 1.240% 1.210%
30yr All-in Corporate A rated Yield

3.712%

0.00% 0.24% 0.24% 3.188% 3.740% 3.632% 3.358% 3.712% 3.476%
US 10 Year 2.875% 0.02% 0.47% 0.47% 1.60% 2.50% 2.39% 2.31% 2.33% 2.41%
CDX IG 58.585 -2.852                

The information contained herein is intended for advisors for general information only and is compiled from sources believed to be reliable, but no representation or warranty, express or implied, is made as to its accuracy. All opinions contained in the commentary and expressed by the portfolio manager are subject to change without notice and are provided in good faith without legal responsibility. All market data is sourced from Bloomberg.