The U.S. announced that it will move forward with imposing additional tariffs...

Posted: Wednesday, August 8, 2018 - 08:41 EDT

Late yesterday, the U.S. announced that it will move forward with imposing tariffs on an additional $16 billion of Chinese imported goods.  The proposed tax rate of 25%  will begin on August 23.  Back in July, the U.S. initiated the 25% tax on approximately $34 billion of Chinese imports that prompted the Chinese to retaliate with tariffs of their own.  With yesterday’s announcement, China has once again indicated that it will respond in kind with dollar for dollar taxes on $16 billion of goods.  The U.S. trade representatives are now reviewing supplementary taxable goods with a list up to $200 billion at a rate of 10% if the disagreement between China and the U.S. worsens.  Despite the ongoing trade dispute, recent trade data from China still displays strong export growth at 12.2% year over year in July.  Trade data showed an uptick in imports mostly as a result of higher energy prices.  As a result of the trade dispute, the U.S. dollar is stronger this morning while global equity markets are mixed.

The Canadian corporate credit market was quiet yesterday following the long weekend.  Although the tone in the market remained stable, volumes remained light.  There was some activity around financial bonds while the market will look for any potential issuance. More earnings will trickle in later today including two of the large life insurers in Canada.   As a result of the recent stronger tone, spreads ended the day approximately 1bps tighter.

Equity Markets:

 

  Index Level % Change QTD YTD Q1 2017 Q2 2017 Q3 2017 Q4 2017 Q1 2018 Q2 2018
S&P 500 2,858.45 0.28% 5.31% 8.10% 6.07% 3.09% 4.48% 6.64% -0.76% 3.43%
TSX

16,286.30

-0.82%

0.24%

2.19%

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

2.28%

0.02% 0.21% 0.41% 1.12% 1.39% 1.75% 1.87% 1.97% 2.07%
Canada 10 Year 2.37% 0.02% 0.20% 0.33% 1.63% 1.76% 2.10% 2.05% 2.09% 2.17%
Canada 30 Year 2.38% 0.02% 0.18% 0.12% 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

3.66%

0.02% 0.22% 0.16% 3.63% 3.36% 3.71% 3.48% 3.47% 3.45%
US 10 Year 2.97% 0.00% 0.11% 0.56% 2.39% 2.31% 2.33% 2.41% 2.74% 2.86%
CDX IG 58.188 0.073                

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.