The U.S. released durable goods orders that increased by 0.4%

Posted: Wednesday, March 13, 2019 - 09:08 EDT

This morning, the U.S. released durable goods orders that increased by 0.4%, beating expectations of -0.4%.  Aircraft orders drove the increase in February although capital orders and shipments excluding air both grew by 0.8%.  Uncertainty remains for capital goods orders going forward given the ongoing trade discussions globally.

U.K. Prime Minister May finally brought her Brexit bill to parliament yesterday evening after negotiating additional concessions from the European Union related to the contentious Irish backstop.  Despite the revised version of the Brexit bill, the deal was still defeated by a margin of 391 to 242.  As a result of the defeat, many are speculating whether an extension will be made prior to the March 29 deadline or if PM May would eventually call another referendum.  The European Union commented after the vote yesterday and indicated that there are very few additional concessions that would make sense.  However, the EU is willing to take a sit and watch approach while the U.K. mulls its Brexit options.  In the interim, the EU will analyze various tariffs options related to the U.K. while PM May continues to aspire towards a deal with the EU on March 29. 

The new issue Canadian corporate credit market took a breather yesterday, allowing investors to digest the new supply.  Given the market break week, volumes remained on the lower end.  The Brexit vote did not move credit markets materially given that investors largely expected the vote to be rejected.  Outside of the British pound underperforming on the day, 10-year Canadian government yields remain at the lower end of the range over the past two years.  With the continued expectation for rates to remain low in the near term, given fewer rate hikes by central banks, the demand for corporate credit remains strong.  To end the day, spreads tightened anywhere from 1-3bps.

Equity Markets:

  Index Level % Change QTD YTD Q3 2017 Q4 2017 Q1 2018 Q2 2019 Q3 2019 Q4 2019
S&P 500 2,791.52

0.30%

11.82% 11.82% 4.48% 6.64%

-0.76%

3.43% 7.71% -13.52%
TSX

16,136.66

0.19%

13.24%

13.24%

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

1.66%

0.01% -0.23% -0.23% 1.75% 1.87% 1.97% 2.07% 2.34% 1.89%
Canada 10 Year 1.76% 0.00% -0.21% -0.21% 2.10% 2.05% 2.09% 2.17% 2.43% 1.97%
Canada 30 Year 2.05% 0.00% -0.14% -0.14% 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

3.55%

0.00% -0.14% -0.14% 3.71% 3.48% 3.47% 3.45% 3.72% 3.68%
US 10 Year 2.62% 0.02% -0.06% -0.06% 2.33% 2.41% 2.74% 2.86% 3.06% 2.69%
CDX IG 58.557 -1.023                

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.