Following Chinese New Year holidays, trade representatives from the U.S...

Posted: Monday, February 11, 2019 - 09:14 EST

Following the Chinese New Year holidays, trade representatives from the U.S. will head to China to resume trade negotiations on Thursday.  The sentiment was softer to end last week after President Trump indicated that he would no longer head to Beijing to meet with President Xi.  The deadline to reach a trade deal draws closer, as tariffs are expected to increase on $200bil of Chinese imported goods on March 1. 

To start the week, equity markets in Europe are opening higher as there is still investor optimism that a trade deal can be formalized in principle.  Additional headwinds still persist, that include another potential U.S. government shutdown.  The U.S. temporarily reopened the government in order for both Democrats and Republicans to restart talks.  If no agreement is made by midnight this coming Friday, the temporary funding for government agencies will once again be suspended.  The economic calendar picks up this week with the U.S. releasing inflation data on Wednesday, while Thursday will see both retail sales and PPI demand.  The Fed will also have six speakers this week including Chairman Powell tomorrow.

The weaker tone to start Friday led to selling in the Canadian corporate credit market.  However, buyers stepped in during the afternoon session that allowed for a more balanced trading session to end the day.  This morning, we continue to see bank issuance outside of the domestic market with CIBC issuing a 1-year FRN in the Australian market.  Although the issuance calendar has been light to start the year, there are two investor roadshows this week that include the Fairstone Financial ABS deal, along with a P3 project involving the BC Hydro facility.  The earnings calendar picks up this week leading into the upcoming long weekend in Canada.  Overall, spreads ended Friday mostly unchanged.

Equity Markets:

  Index Level % Change QTD YTD Q3 2017 Q4 2017 Q1 2018 Q2 2019 Q3 2019 Q4 2019
S&P 500 2,707.88 0.07% 8.24% 8.24% 4.48% 6.64%

-0.76%

3.43% 7.71% -13.52%
TSX

15,633.33

-0.45%

9.39%

9.39%

3.68% 4.44%

-4.52%

6.77% -0.56% -10.11%

Rates:

 

Today

% Change

QTD change

YTD change

Q3 2017

Q4 2017

Q1 2018

Q2 2018

Q3 2018

Q4 2018

Canada 5 Year

1.83%

0.04% -0.06% -0.06% 1.75% 1.87% 1.97% 2.07% 2.34% 1.89%
Canada 10 Year 1.92% 0.04% -0.05% -0.05% 2.10% 2.05% 2.09% 2.17% 2.43% 1.97%
Canada 30 Year 2.17% 0.02% -0.02% -0.02% 2.47% 2.27% 2.23% 2.21% 2.42% 2.18%
30yr Generic Corporate A rated Spread 1.50% 0.00% 0.00% 0.00% 1.24% 1.21% 1.24% 1.28% 1.30% 1.50%
30yr All-in Corporate A rated Yield

3.67%

0.02% -0.02% -0.02% 3.71% 3.48% 3.47% 3.45% 3.72% 3.68%
US 10 Year 2.64% 0.01% -0.04% -0.04% 2.33% 2.41% 2.74% 2.86% 3.06% 2.69%
CDX IG 66.777 -0.407                

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.