U.S. non-farm payrolls for July increased by 157k...

Posted: Friday, August 3, 2018 - 10:01 EDT

U.S. non-farm payrolls for July increased by 157k, which was below expectations of +193k.  However, two month net revisions were positive and added an additional 59k jobs.  The unemployment rate remained stable at 3.9% while the participation rate was unchanged from last month at 62.9%.  With the job market continuing to show strength, the focus remains on wages which increased in the month by 0.3% and at 2.7% on an annual basis.  Canadian trade came in above expectations with the trade deficit narrowing from $2.7bil to $0.6bil in June.  Exports increased by 4.1% while imports declined by 0.2%.  The positive trade data in the month should be positive for second quarter GDP growth.  Exports increased primarily due to the energy sector, with new GDP estimates for the second quarter in Canada tracking near the 3% mark.

Telus reported Q2 earnings this morning that also showed strong net adds this quarter, similar to Bell and Rogers.  Telus added 87k new post-paid wireless customers while churn remained stable at 0.83%, which remains the strongest in the industry.  ABPU continues to trend higher on a year over year basis at $67.24.  On the wireline segment, internet continued to add 29k subscribers in the quarter while IPTV also increased by 15k net new customers.  Leverage remained stable at 2.7x.  The Canadian corporate credit market was stable with volumes on the quieter end leading up to the long weekend.  Investors continue to focus on corporate earnings that remain positive.  Spreads ended the day mostly unchanged.

Equity Markets:

 

  Index Level % Change QTD YTD Q1 2017 Q2 2017 Q3 2017 Q4 2017 Q1 2018 Q2 2018
S&P 500 2,827.22 0.49% 4.13% 6.89% 6.07% 3.09% 4.48% 6.64% -0.76% 3.43%
TSX

16,409.16

0.20%

1.00%

2.96%

2.41% -1.64% 3.68% 4.44% -4.52% 6.77%

Rates:

 

Today

% Change

QTD change

YTD change

Q1 2017

Q2 2017

Q3 2017

Q4 2017

Q1 2018

Q2 2018

Canada 5 Year

2.26%

0.00% 0.19% 0.40% 1.12% 1.39% 1.75% 1.87% 1.97% 2.07%
Canada 10 Year 2.36% -0.01% 0.19% 0.31% 1.63% 1.76% 2.10% 2.05% 2.09% 2.17%
Canada 30 Year 2.37% -0.01% 0.17% 0.11% 2.30% 2.15% 2.47% 2.27% 2.23% 2.21%
30yr Generic Corporate A rated Spread 1.28% 0.00% 0.04% 0.04% 1.33% 1.21% 1.24% 1.21% 1.24% 1.24%
30yr All-in Corporate A rated Yield

3.65%

-0.01% 0.21% 0.15% 3.63% 3.36% 3.71% 3.48% 3.47% 3.45%
US 10 Year 2.97% -0.01% 0.11% 0.57% 2.39% 2.31% 2.33% 2.41% 2.74% 2.86%
CDX IG 59.485 0.687                

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.