Canadian employment for April fell by 1.1k

Posted: Friday, May 11, 2018 - 09:02 EDT

Canadian employment for April fell by 1.1k, which was below expectations for an increase of +20k.  This follows a strong increase last month of +32k.  All of the jobs lost were part-time, as Canada added 28.8k full-time jobs offset by a loss of -30k part-time jobs.  The participation rate ticked lower by 0.1% to 65.4, which left the unemployment rate unchanged at 5.8%.  Most of the employment declines were led by the construction, hospitality and professional services sectors.  By region, Quebec saw the largest declines while Ontario had the biggest increase.  Wage increases were the most positive piece in this morning’s jobs data increasing by 0.2% from the previous month to 3.3%.  Wages improved at the fastest pace since 2012, which could be an indicator that the labour market is tightening.

Two new issues came to the Canadian corporate credit market yesterday.  BP Capital Markets issued a maple deal that priced $450mil 7-year bonds at +113bps over the curve.  Morguard followed suit with a $200mil 3-year note at +200bps over the curve.  Despite the small size of the Morguard deal, there were 44 buyers with fills in the 10% range.  The stronger tone in the market, coupled with a healthy new issue concession on the new Morguard bonds, led to continued spread tightening in the secondary market.  Corporate credit spreads ended the day tighter by 1-2bps with the positive tone carrying over to this morning.

Equity Markets:

 

  Index Level % Change QTD YTD Q4 2016 Q1 2017 Q2 2017 Q3 2017 Q4 2017 Q1 2018
S&P 500 2,723.07 0.94% 3.30% 2.51% 3.82% 6.07% 3.09% 4.48% 6.64% -0.76%
TSX

15,959.50

0.31%

4.12%

-0.59%

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

2.208%

0.00% 0.24% 0.34% 1.150% 1.119% 1.393% 1.753% 1.866% 1.969%
Canada 10 Year 2.378% -0.01% 0.29% 0.33% 1.750% 1.625% 1.762% 2.099% 2.045% 2.091%
Canada 30 Year 2.415% -0.03% 0.19% 0.15% 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

3.655%

-0.03% 0.19% 0.18% 3.740% 3.632% 3.358% 3.712% 3.476% 3.468%
US 10 Year 2.957% -0.01% 0.22% 0.55% 2.50% 2.39% 2.31% 2.33% 2.41% 2.74%
CDX IG 58.956 -0.565                

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.