U.S. retail sales for March increased by 0.6%...

Posted: Monday, April 16, 2018 - 09:21 EDT

U.S. retail sales for March increased by 0.6%, which was above expectations of 0.4%.  March saw a rebound in consumer spending after a decline of 0.1% in the previous month.  Consumers increased spending on autos as well as furniture and home renovations stores.  The Federal Reserve noted in its most recent meeting that much of the weakness in economic data was transitory, which is evident in today’s retail sales release.  Also positive were retail sales data excluding autos and gas which moved higher by 0.3% in the month.  The strong rebound in March helped to offset the declines in the first two months of the year, although Q1 GDP is expected to be tempered. 

Bank of America released earnings this morning that beat estimates, reporting net income up a record 30% to $6.9 billion in the first quarter.  Similar to results for the large U.S. money center banks last week, net interest income was the beneficiary of higher interest rates as result of Fed rate hikes and continued loan growth.  Net interest income increased by 5%, while provisions for credit losses were mostly stable in the quarter.  Volatility drove equity trading revenues higher although bond trading activity remains lower.  The CET1 ratio for Bank of America ended the quarter at 11.3%.

Volumes in the Canadian corporate credit market were light on Friday although there continued to be focused on the recently issued Scotia deposit note.  The large $2.25 billion issuance size kept spreads wider after the new deal repriced the curve on Thursday.  Despite the generally softer tone on Friday, as a result of geopolitical concerns in Syria, corporate credit spreads were stable.  Overall, spreads ended Friday mostly unchanged.

Equity Markets:

 

  Index Level % Change QTD YTD Q4 2016 Q1 2017 Q2 2017 Q3 2017 Q4 2017 Q1 2018
S&P 500 2,656.30 -0.29% 0.66% -0.10% 3.82% 6.07% 3.09% 4.48% 6.64% -0.76%
TSX

15,273.97

-0.03% -0.49%

-4.99%

4.53% 2.41% -1.64% 3.68% 4.44% -4.52%

Rates:

 

Today

% Change

QTD change

YTD change

Q4 2016

Q1 2016

Q2 2017

Q3 2017

Q4 2017

Q1 2018

Canada 5 Year

2.130%

-0.01% 0.16% 0.26% 1.150% 1.119% 1.393% 1.753% 1.866% 1.969%
Canada 10 Year 2.283% 0.00% 0.19% 0.24% 1.750% 1.625% 1.762% 2.099% 2.045% 2.091%
Canada 30 Year 2.391% 0.00% 0.16% 0.13% 2.350% 2.302% 2.148% 2.472% 2.266% 2.228%
30yr Generic Corporate A rated Spread 1.240% 0.00% 0.00% 0.03% 1.390% 1.330% 1.210% 1.240% 1.210% 1.240%
30yr All-in Corporate A rated Yield

3.631%

0.00% 0.16% 0.16% 3.740% 3.632% 3.358% 3.712% 3.476% 3.468%
US 10 Year 2.860% 0.03% 0.12% 0.45% 2.50% 2.39% 2.31% 2.33% 2.41% 2.74%
CDX IG 60.731 -0.608                

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.