Brexit concerns remain in the headlines

Posted: Friday, March 15, 2019 - 09:41 EDT

Brexit concerns remain in the headlines this morning following another vote in the U.K. parliament yesterday to officially delay the March 29 deadline.  MPs voted in favour of the extension by a margin of 412 to 202.  In addition, a motion was rejected for a second referendum despite calls from the opposition Labour party for another public vote.  Prime Minster May is now expected to put forward a third Brexit bill before March 20.  If the third attempt is again voted down, she will ask the EU for an extension.  This morning,  the U.K. government noted that businesses should still prepare for a no-deal Brexit, similar to the preparations currently being planned by the government.  Officials also added that the next Brexit steps will be released on Monday.  The EU will continue to study plans related to U.K. tariffs along with the Irish border in the interim, and is determined to avoid a hard Irish border.

Yesterday evening, S&P upgraded Sun Life by one notch to A+ citing strong LICAT capital levels following the new regulatory measure in 2018.  Leverage for the company remains substantially below the rating agency cap of 30%, and is currently at 22% to end the year.  Overall, the company has maintained a strong business profile, reducing the volatile but non-core U.S. variable annuity business over the past several years.  In the Canadian corporate credit market, flows continued to decline to end the March break week.  The new issue market also remained quiet with no real notable flows or trends yesterday.  Overall, spreads ended yesterday mostly unchanged.

Equity Markets:

  Index Level % Change QTD YTD Q3 2017 Q4 2017 Q1 2018 Q2 2019 Q3 2019 Q4 2019
S&P 500 2,808.48 -0.09% 12.55% 12.55% 4.48% 6.64%

-0.76%

3.43% 7.71% -13.52%
TSX

16,087.55

-0.39%

13.00%

13.00%

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

1.60%

-0.06% -0.29% -0.29% 1.75% 1.87% 1.97% 2.07% 2.34% 1.89%
Canada 10 Year 1.71% -0.05% -0.25% -0.25% 2.10% 2.05% 2.09% 2.17% 2.43% 1.97%
Canada 30 Year 2.04% -0.01% -0.15% -0.15% 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

3.54%

-0.01% -0.15% -0.15% 3.71% 3.48% 3.47% 3.45% 3.72% 3.68%
US 10 Year 2.62% -0.01% -0.06% -0.06% 2.33% 2.41% 2.74% 2.86% 3.06% 2.69%
CDX IG 58.632 0.204                

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.