Trade tensions between China and the U.S. continue to impact markets

Posted: Monday, December 10, 2018 - 09:29 EST

Trade tensions between China and the U.S. continue to impact global bonds and stocks. Markets are also nervous ahead of Brexit vote, which has been scheduled on December 11th. However, there is are unconfirmed reports that the UK Parliament vote will be delayed.  Following on from the very strong Canadian employment number on Friday, housing starts reached 215,000 in November, which is the strongest print since July. While economists still expect home building to remain a drag in 2019, activity picking up in November is encouraging for residential investment as 2018 comes to a close.

The pace of credit spread widening accelerated last week. Bloomberg Barclays Canada Aggregate index closed at 142.7 bps, which is wider by 8 bps from the previous week.  New issuance stands at $96.5 billion so far in 2018.  Given wider secondary credit spreads and weaker market tones, we will unlikely surpass 2017 issuance levels of $109.8 billion.

Equity Markets:

 

  Index Level % Change QTD YTD Q2 2017 Q3 2017 Q4 2017 Q1 2018 Q2 2018 Q3 2018
S&P 500 2,633.08 -2.33% -9.26% 0.32% 3.09% 4.48% 6.64% -0.76% 3.43% 7.71%
TSX

14,495.13

-0.95%

-7.44%

-6.18%

-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

2.00%

-0.01% -0.34% 0.14% 1.39% 1.75% 1.87% 1.97% 2.07% 2.34%
Canada 10 Year 2.07% -0.03% -0.36% 0.02% 1.76% 2.10% 2.05% 2.09% 2.17% 2.43%
Canada 30 Year 2.23% 0.00% -0.19% -0.03% 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

3.53%

0.02% -0.19% -0.01% 3.36% 3.71% 3.48% 3.47% 3.45% 3.72%
US 10 Year 2.86% 0.01% -0.20% 0.45% 2.31% 2.33% 2.41% 2.74% 2.86% 3.06%
CDX IG 82.001 -0.749                

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.