The positive news over the weekend has brought an improved market tone this morning

Posted: Monday, November 26, 2018 - 09:08 EST

The positive news over the weekend has brought an improved market tone this morning, with both equities and oil prices up.  The EU agreed to a Brexit withdrawal agreement, the next hurdle is the UK parliamentary vote in December.  The Italian Prime Minister demonstrated a willingness to modify the 2019 deficit in order to move forward with the EU budget process.  This week, we will have a few Fed Speakers and FOMC Minutes from November’s meeting. The market is looking for signs of potential rate hike frequency.

Last week, the primary bond market remained slow, given the risk-off tone in global markets and the U.S. Thanksgiving holiday.  We saw two corporate deals from CU Inc and Vancouver Airport.  This brings  total corporate issuance to $98.56 billion YTD, which is down 4.4% Y/Y.  Canadian corporate spreads widened in reaction to the combination of ongoing trade tensions between the U.S. and China, weak oil prices, and geopolitical uncertainties.  Bloomberg Barclay Canada Aggregate OAS reached 1.287%, which is the highest since December 2016. In early December, Canadian investors will receive about $ 19 billion in coupon and principal bond repayments. With a higher demand expectation, we will likely to see tightening provincial and corporate spreads for higher quality issuers.

Equity Markets:

 

  Index Level % Change QTD YTD Q2 2017 Q3 2017 Q4 2017 Q1 2018 Q2 2018 Q3 2018
S&P 500 2,632.56 -0.66% -9.39% 0.19% 3.09% 4.48% 6.64% -0.76% 3.43% 7.71%
TSX

15,010.73

-0.54%

-6.25%

-4.97%

-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

2.31%

0.00% -0.03% 0.44% 1.39% 1.75% 1.87% 1.97% 2.07% 2.34%
Canada 10 Year 2.36% -0.01% -0.07% 0.31% 1.76% 2.10% 2.05% 2.09% 2.17% 2.43%
Canada 30 Year 2.41% -0.01% -0.02% 0.14% 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

3.71%

0.01% -0.02% 0.16% 3.36% 3.71% 3.48% 3.47% 3.45% 3.72%
US 10 Year 3.06% 0.02% 0.00% 0.66% 2.31% 2.33% 2.41% 2.74% 2.86% 3.06%
CDX IG 79.150 -1.132                

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.