Canadian headline inflation for October increased

Posted: Friday, November 23, 2018 - 09:12 EST

Canadian headline inflation for October increased by 0.3% for the month, which exceeded expectations of an increase of 0.1%.  On a year over year basis, CPI moved higher from 2.2% last month to 2.4%.  As expected, gasoline prices fell by 3.2% as a result of declining prices at the pump.  However, the higher cost for automobiles and increased clothing/footwear prices drove inflation higher.  All three measures of core inflation remain in a range of 1.9%-2.1% similar to last month.  Retails sales in September for Canada beat expectations for a flat reading, with the month increasing at 0.2%.  Consumer spending over the summer has been weak, following an increase of 2.1% back in May of this year.  The slight boost in September should contribute positively to Q3 Canadian GDP that is expected in increase at an annualized pace around 2%.  During the month, spending in categories including used cars and home furnishing stores was offset by decreases in alcohol and building materials sectors.

As a result of the market closure in the U.S., as well as a shortened trading day south of the border today, flows in the Canadian corporate credit market have been impacted.  The developments related to Brexit led to a marginally more positive tone although oil prices continued to slide.  WTI crude now sits below $52/barrel.  Flows are expected to remain light today leading into the weekend with spreads ending yesterday mostly unchanged.

Equity Markets:

 

  Index Level % Change QTD YTD Q2 2017 Q3 2017 Q4 2017 Q1 2018 Q2 2018 Q3 2018
S&P 500 2,649.93 0.30% -8.79% 0.84% 3.09% 4.48% 6.64% -0.76% 3.43% 7.71%
TSX

15,091.58

-0.02%

-5.75%

-4.46%

-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

2.28%

-0.02% -0.06% 0.42% 1.39% 1.75% 1.87% 1.97% 2.07% 2.34%
Canada 10 Year 2.34% -0.02% -0.09% 0.29% 1.76% 2.10% 2.05% 2.09% 2.17% 2.43%
Canada 30 Year 2.39% -0.03% -0.04% 0.12% 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

3.69%

-0.01% -0.04% 0.14% 3.36% 3.71% 3.48% 3.47% 3.45% 3.72%
US 10 Year 3.05% -0.01% -0.01% 0.64% 2.31% 2.33% 2.41% 2.74% 2.86% 3.06%
CDX IG 80.428 2.228                

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.