Retail sales in Canada for October increased by 0.3%

Posted: Friday, December 21, 2018 - 09:53 EST

Retail sales in Canada for October increased by 0.3%, which was below expectations of 0.5%.  Spending in the month was driven by motor vehicles and parts dealers that saw an increase of 4.1% in the used car segment. Expenditures related to gasoline stations also saw increases of 1.9% in the month. Excluding autos, retails sales were flat for the month, as home furnishing and electronics stores saw declines before the holiday season. Despite lower than expected personal consumption in the month, Canadian GDP in October increased by 0.3%, which translated to year over year growth of 2.2%. The manufacturing sector helped to boost growth in the month that also saw an increase in oil production. Canadian crude prices declined further in November but have rebounded in December, currently around $30. The third reading of U.S. GDP was revised 0.1% lower to 3.4%. The decline was driven by the 0.1% decline in personal consumption. Growth in 2018 remains the strongest since 2014, driven by continued strength in labour markets along with tax cuts enacted to start the year.

Weakness persisted in the broader Canadian corporate credit market as a result of concerns globally of trade disputes between China and the U.S.  Equity markets continue to track lower going into the holiday season while the Canadian dollar remains weak against the U.S. dollar. Flows in the corporate credit market were thin with today being the last full trading day before Christmas. The negative sentiment led to spreads widening another 2-3bps to end the day.

This will be the last market update for the year.  Updates will resume on January 7th.

Wishing you a prosperous 2019.

Equity Markets:

  Index Level % Change QTD YTD Q2 2017 Q3 2017 Q4 2017 Q1 2018 Q2 2018 Q3 2018
S&P 500 2,467.42 -1.58% -14.92% -5.93% 3.09% 4.48% 6.64% -0.76% 3.43% 7.71%
TSX

14,141.77

-0.86%

-11.44%

-10.23%

-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

1.94%

0.05% -0.40% 0.08% 1.39% 1.75% 1.87% 1.97% 2.07% 2.34%
Canada 10 Year 2.00% 0.04% -0.43% -0.04% 1.76% 2.10% 2.05% 2.09% 2.17% 2.43%
Canada 30 Year 2.15% 0.03% -0.27% -0.11% 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

3.45%

0.05% -0.27% -0.09% 3.36% 3.71% 3.48% 3.47% 3.45% 3.72%
US 10 Year 2.79% -0.01% -0.27% 0.39% 2.31% 2.33% 2.41% 2.74% 2.86% 3.06%
CDX IG 88.916 -0.710                

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.