The markets remain focused on trade tensions

Posted: Monday, September 10, 2018 - 09:01 EDT

The markets remain focused on trade tensions, though equity markets in Europe are opening in positive territory, and U.S. equity futures look to be moving in the same direction.  The U.S. announced late last week that it could potentially increase tariffs on the list of Chinese goods up to $267 billion.  This is an increase from the original $200 billion worth of imported Chinese goods taxed at an approximate 25% rate.  Outside of trade concerns, the economic calendar will be active in the U.S. this week.  The producer price index for August in the U.S. is expected to increase by 0.2%, while U.S. headline inflation data  is expected to be running around 2.8% y/y with core inflation at 2.4%, which should continue to support the rate raising path by the Fed.  US retail sales are also predicted to grow by 0.4% for the month of August.

The Canadian corporate credit market on Friday gave a chance for investors to digest the large scale of issuance over the past week.  The tone remained stable with focus on domestic financials following issuance by BMO and TD.  Potential issuance remains high as several issuers have roadshows booked this week including Thames Water, Allied Properties, and Barclays.  Overall, corporate credit spreads ended Friday mostly unchanged.

Equity Markets:

 

  Index Level % Change QTD YTD Q1 2017 Q2 2017 Q3 2017 Q4 2017 Q1 2018 Q2 2018
S&P 500 2,871.68 -0.22% 6.05% 8.86% 6.07% 3.09% 4.48% 6.64% -0.76% 3.43%
TSX

16,090.27

-0.07%

-0.70%

1.24%

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

2.22%

0.05% 0.15% 0.35% 1.12% 1.39% 1.75% 1.87% 1.97% 2.07%
Canada 10 Year 2.29% 0.06% 0.12% 0.25% 1.63% 1.76% 2.10% 2.05% 2.09% 2.17%
Canada 30 Year 2.31% 0.06% 0.10% 0.04% 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

3.59%

0.06% 0.14% 0.08% 3.63% 3.36% 3.71% 3.48% 3.47% 3.45%
US 10 Year 2.94% 0.00% 0.08% 0.53% 2.39% 2.31% 2.33% 2.41% 2.74% 2.86%
CDX IG 58.909 -0.937                

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.