The U.S. administration appears to be moving on to a new trade dispute

Posted: Tuesday, April 9, 2019 - 11:10 EDT

The U.S. administration appears to be moving on to a new trade dispute, given that the current U.S. and China trade discussions appear to be moving in the right direction. This morning, President Trump indicated that the U.S. will look to impose tariffs on $11 billion of EU imported goods.  This follows actions from the EU that is currently arranging tariffs against the U.S. related to government subsidies provided to Boeing.  However, Trump is citing a ruling from the WTO that indicated subsidies from the EU to Airbus had adversely impacted Boeing sales.  U.S. trade representative Lighthizer had also indicated in a statement that he has lost patience with the dispute related to the airplane sector and wishes to see an end to the European subsidies.  Similar to the past week, Brexit continues to stay in the headlines prior to the April 12 deadline, as PM May meets with both the German and French leaders.  Several EU officials are arguing for the UK to extend the deadline to either December 2019 or March 2020, while May is still focused on a shorter extension till June 30 this year.  May is also maintaining her dialogue with Labour leader Corbyn, although some members of her Conservative party may rebuke any arrangement with the opposition party.

This morning, many fixed income investors will be watching the jumbo bond offering from Saudi Aramco in the U.S. dollar market.  Aramco is expected to issue a multi-tranche deal with total proceeds between $10-$15bil, although early indications point to order books above $100bil.  Current indicative levels point to the new Aramco bonds pricing at spreads equivalent to those of the Saudi government, especially given the strong government support and economic ties between the two entities.  In the new issue Canadian corporate credit market, TransCanada Pipelines finally tapped the senior unsecured market as expected.  The issuer priced $1bil of long bonds that came at +234bps over the curve, which brought out 51 buyers and fills in the 15%-20% range.  Flows as a result were focused around the new TRP issue although the new bonds closed in the secondary’s around new issue spread.  To end the day, generic corporate credit spreads ended the day mostly unchanged.

Equity Markets:

  Index Level % Change QTD YTD Q4 2017 Q1 2018 Q2 2018 Q3 2018 Q4 2018 Q1 2019
S&P 500 2,895.77 0.10% 2.20% 16.14% 6.64% -0.76%


7.71% -13.52% 13.65%





4.44% -4.52%


-0.56% -10.11% 13.29%




% Change

QTD change

YTD change

Q4 2017

Q1 2018

Q2 2018

Q3 2018

Q4 2018

Q1 2019

Canada 5 Year


0.03% 0.08% -0.29% 1.87% 1.97% 2.07% 2.34% 1.89% 1.52%
Canada 10 Year 1.73% 0.03%


-0.24% 2.05% 2.09% 2.17% 2.43% 1.97% 1.62%
Canada 30 Year 2.00% 0.03% 0.11% -0.19% 2.27% 2.23% 2.21% 2.42% 2.18% 1.89%
30yr Generic Corporate A rated Spread 1.50% 0.00% 0.00% 0.00% 1.21% 1.24% 1.28% 1.30% 1.50% 1.50%
30yr All-in Corporate A rated Yield


0.03% 0.11% 0.11% 3.48% 3.47% 3.45% 3.72% 3.68% 3.39%
US 10 Year 2.52% -0.01% 0.11% -0.17% 2.41% 2.74% 2.86% 3.06% 2.69% 2.41%
CDX IG 60.602 0.583                

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.