In the U.S., retail sales for October increased

Posted: Thursday, November 15, 2018 - 09:22 EST

In the U.S., retail sales for October increased by 0.8%, surpassing expectations for a 0.5% increase.  The strong consumption over the month was driven by a rebound from depressed levels as a result Hurricane Florence in September.  Autos, gasoline and building materials led sectors higher.  Excluding cars and gasoline, retails sales still increased at a healthy pace of 0.3%.

 

British Prime Minister May was able to have her cabinet agree to the Brexit plan yesterday evening despite a total of four ministers resigning.   This morning, PM May is in parliament debating the plan that will lead to an eventual vote.  May stated that she won’t step aside on Brexit, with Northern Ireland interests at the forefront of her negotiations.  There could be several outcomes if the Brexit bill is not approved, that includes a vote of non-confidence involving May from her own party, or a potential second referendum vote for the country.  The uncertainty is leading to continued weakness in sterling this morning, and currently stands at its weakest level for the month of November.

WTI crude prices stabilized yesterday and sit comfortably above $56/barrel this morning.  However, the global over supply in oil production remains an overhang for prices in the near term.  Federal Reserve Chair Powell also spoke yesterday and indicated that the U.S. economy could face headwinds over the next two years as a result of slowing global growth, reduced fiscal spending from a divided government, and diminished effects from the tax cuts.  Also, tariffs enacted on China earlier this year have not fully passed through the global economy and will remain a risk on economic data going forward. 

In the Canadian corporate credit market, the increased volatility across the globe continued to weigh on spreads.  The focus remained on sellers of oil and gas names in the energy sector with selective buyers stepping in at these wider levels.  To end the day, spreads widened from 2-4bps as a result of the weaker tone.

Equity Markets:

 

  Index Level % Change QTD YTD Q2 2017 Q3 2017 Q4 2017 Q1 2018 Q2 2018 Q3 2018
S&P 500 2,701.58 -0.76% -7.07% 2.75% 3.09% 4.48% 6.64% -0.76% 3.43% 7.71%
TSX

15,133.12

0.01%

-5.54%

-4.26%

-1.64% 3.68% 4.44% -4.52% 6.77% -0.56%

Rates:

 

Today

% Change

QTD change

YTD change

Q2 2017

Q3 2017

Q4 2017

Q1 2018

Q2 2018

Q3 2018

Canada 5 Year

2.33%

-0.06% -0.01% 0.46% 1.39% 1.75% 1.87% 1.97% 2.07% 2.34%
Canada 10 Year 2.39% -0.06% -0.03% 0.35% 1.76% 2.10% 2.05% 2.09% 2.17% 2.43%
Canada 30 Year 2.44% -0.05% 0.02% 0.17% 2.15% 2.47% 2.27% 2.23% 2.21% 2.42%
30yr Generic Corporate A rated Spread 1.30% 0.02% 0.00% 0.02% 1.21% 1.24% 1.21% 1.24% 1.28% 1.30%
30yr All-in Corporate A rated Yield

3.74%

-0.03% 0.02% 0.19% 3.36% 3.71% 3.48% 3.47% 3.45% 3.72%
US 10 Year 3.10% -0.02% 0.04% 0.70% 2.31% 2.33% 2.41% 2.74% 2.86% 3.06%
CDX IG 73.301 1.616                

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.