The tone in both equity and fixed income markets has stabilized this morning

Posted: Monday, November 19, 2018 - 09:04 EST

The tone in both equity and fixed income markets has stabilized this morning although sentiment remains cautious.  WTI crude prices have also held above $56/barrel after briefly falling below $55.  Brexit continues to remain in the background after it was announced last week that the U.K. and European Union had come to an agreement in principle.  However, there remains substantial contention within Prime Minister May’s own party.  Over the weekend, May continued to back her plan and appealed to business leaders to support the bill. 

This week will see a lighter economic calendar leading up to U.S. Thanksgiving on Thursday.  The Bank of Canada will have several meetings this week with investors looking for further information before December’s meeting.  Markets are only pricing in a 12% probability that the BOC will increase rates at this meeting, especially with the recent volatility related to western Canadian select prices.  On Friday, Canada will release its inflation data with headline CPI expected to remain above the 2% mark and core CPI also hovering around 2%.  Inflation has slowly moderated back to the 2% range, after hitting a high back in July of 3%.

Last week in the Canadian corporate credit market, issuers continued to engage with investors for roadshows and meetings.  The risk-off sentiment led to reduced issuance with only EPCOR Utilities tapping the market for a long bond.  There are expectations for Vancouver Airport, Capital Power and Cordelio Power to issue bonds depending upon the market sentiment this week.  AltaGas Canada and Algonquin Power are also scheduled for roadshows this week and will look to raise funding opportunistically.  Flows remained light on Friday, and this week is expected to be the same as a result of U.S. Thanksgivings.  Overall, spreads ended Friday mostly unchanged.

Equity Markets:

 

  Index Level % Change QTD YTD Q2 2017 Q3 2017 Q4 2017 Q1 2018 Q2 2018 Q3 2018
S&P 500 2,736.27 0.22% -5.84% 4.11% 3.09% 4.48% 6.64% -0.76% 3.43% 7.71%
TSX

15,155.50

0.07%

-5.40%

-4.11%

-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

2.30%

-0.01% -0.04% 0.44% 1.39% 1.75% 1.87% 1.97% 2.07% 2.34%
Canada 10 Year 2.38% -0.01% -0.05% 0.33% 1.76% 2.10% 2.05% 2.09% 2.17% 2.43%
Canada 30 Year 2.43% -0.01% 0.01% 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

3.73%

0.01% 0.01% 0.19% 3.36% 3.71% 3.48% 3.47% 3.45% 3.72%
US 10 Year 3.08% 0.02% 0.02% 0.68% 2.31% 2.33% 2.41% 2.74% 2.86% 3.06%
CDX IG 75.435 1.163                

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.