The ECB left its main refinancing rate unchanged at 0%

Posted: Thursday, September 13, 2018 - 09:04 EDT

The ECB left its main refinancing rate unchanged this morning at 0% and will continue its plan to reduce its monthly bond buying program in October to 15 billion euros.  The completion of the bond buying program will be contingent on incoming data.  Although the asset purchase program is also slated to end in December, barring any changes in economic assumptions, the central bank will maintain the process of reinvesting maturing debt for an extended period.  These reinvestments will last as long as necessary, in addition to keeping rates unchanged at least through to the summer of 2019, or as long as needed for inflation to reach the ECB’s target.  The Bank of England also released its monetary policy statement this morning with members unanimously leaving its benchmark interest rate unchanged.  Brexit is still causing substantial uncertainty, especially in the recent months, which has led to softening expectations for business investment.  Businesses are also having difficulties recruiting talent as a result of exchange rate differentials from a falling British pound.  The BOE’s bond buying program will also be left unchanged, although the central bank still believes that ongoing tightening will likely be necessary.

AltaGas announced this morning that it has filed a preliminary prospectus to spin-out the Canadian rate regulated natural gas assets, in addition to renewable wind under a new entity, AltaGas Canada.  AltaGas expects to maintain significant ownership following the IPO of the new subsidiary.  Details were light on the credit impact, including leverage expectations and the FFO/debt ratio.  The IPO is expected to close in late October to early November.  In the Canadian corporate credit market, CIBC joined several other Canadian banks to raise deposit funding before the bail-in deadline.  CIBC issued $1bil 3-year bonds at +72bps over the curve.  There was moderate selling against the new deposit note.  Overall, 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 2,888.92 0.04% 6.70% 9.52% 6.07% 3.09% 4.48% 6.64% -0.76% 3.43%





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




% Change

QTD change

YTD change

Q1 2017

Q2 2017

Q3 2017

Q4 2017

Q1 2018

Q2 2018

Canada 5 Year


-0.01% 0.18% 0.38% 1.12% 1.39% 1.75% 1.87% 1.97% 2.07%
Canada 10 Year 2.32% -0.02% 0.15% 0.28% 1.63% 1.76% 2.10% 2.05% 2.09% 2.17%
Canada 30 Year 2.34% -0.01% 0.14% 0.08% 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


-0.01% 0.18% 0.12% 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 56.314 -0.793                

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.