All eyes will be on the summit in Singapore this week...

Posted: Monday, June 11, 2018 - 09:01 EDT

All eyes will be on the summit in Singapore this week, as President Trump embarks on a meeting with Kim Jong-Un.  Prior to the meeting that occurs tomorrow, U.S. Secretary of State Pompeo indicated this morning that sanctions on North Korea will not be lifted until there is verifiable evidence that the country has denuclearized.  Leading up to the meeting, diplomats from both countries have already made some progress although the U.S. would look to increase sanctions if diplomacy does not move in the right direction. 

Otherwise, this week will see several central bank meetings including the FOMC on Wednesday that is expected to see the Fed raise interest rates by 25bps.  The U.S. continued to show strong job growth in May that should allow the Fed to reaffirm the possibility of continued interest rate hikes as well as reducing its balance sheet.  More interestingly, investors will be focusing on the ECB meeting on Thursdays after their chief economist noted that the central bank could lay out a timeline for ending their asset purchase program this meeting.

The Canadian corporate credit market remained active on Friday although the focus will be on Canadian Tire this morning.  The company wrapped up its road show on Friday and is expected to raise funding for its recent Helly Hanson acquisition.  Investor appetite could be strong given that Canadian Tire has not raised funding outside of its REIT in recent history.  The primary market is expected to remain busier this week as several other issuers continue to hold meetings with investors.  Despite stronger flows on Friday, corporate credit spreads were mostly unchanged to end the day.

Equity Markets:

 

  Index Level % Change QTD YTD Q4 2016 Q1 2017 Q2 2017 Q3 2017 Q4 2017 Q1 2018
S&P 500 2,779.03 0.31% 5.65% 4.85% 3.82% 6.07% 3.09% 4.48% 6.64% -0.76%
TSX

16,202.69

0.06%

6.00%

1.21%

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

2.148%

0.01% 0.18% 0.28% 1.150% 1.119% 1.393% 1.753% 1.866% 1.969%
Canada 10 Year 2.310% 0.03% 0.22% 0.27% 1.750% 1.625% 1.762% 2.099% 2.045% 2.091%
Canada 30 Year 2.362% 0.03% 0.13% 0.10% 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

3.602%

0.03% 0.13% 0.13% 3.740% 3.632% 3.358% 3.712% 3.476% 3.468%
US 10 Year 2.961% 0.02% 0.22% 0.56% 2.50% 2.39% 2.31% 2.33% 2.41% 2.74%
CDX IG 65.781 -0.560                

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.