The ECB embarked on their monetary policy meeting

Posted: Wednesday, April 10, 2019 - 09:24 EDT

The ECB embarked on their monetary policy meeting this morning with the central bank leaving its main refinancing rate unchanged at 0%.  As previously discussed, the ECB expected rates to remain at present levels at least through the end of this year and will continue to holds rates at current levels for as long as necessary past 2019.  In regards to the balance sheet, the central bank will remain focused on reinvesting QE debt for an extended period of time, well past the date of the first rate hike.  There was very little new information on the previously announced TLTRO, with details expected to be communicated in the future depending on the state of the economy. 

In the U.S., headline inflation for March came in at expectations of 0.4%.  On a year over year basis, CPI is tracking at 1.9%, moving higher from 1.5% in the previous month.  Energy prices moved higher during the month by 3.5%, largely driven by gasoline prices that had previously declined over the past year.  Excluding food and energy, core inflation dipped by 0.1% to 2.0%.  The largest decline was related to apparel prices, down 1.9% for the month, although a methodology change for data collection could be driving some volatility across the figures.  CPI, which was mostly in line with expectations, is not anticipated to move the needle on future rate moves by the Fed.

Yesterday was another day of additional new issuance in the Canada corporate credit market.  Equitable Bank came to the market with a $150mil 2-year bond at +160bps over the curve, after the issuer took a hiatus over the past couple years from the wholesale market.  Books were well subscribed with 26 buyers in the deal.  Alectra Inc. followed up with a $200mil long bond that priced at +146bps over the curve.  As a result of the additional issuance yesterday, secondary flows were mostly focused on the new deals.  However, the tone remained constructive leading to a follow through of investor buying in secondary markets.  Overall, 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 2,878.20 -0.61% 1.61% 15.47% 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




-0.30% 1.87% 1.97% 2.07% 2.34% 1.89% 1.52%
Canada 10 Year 1.71% -0.02% 0.10% -0.25% 2.05% 2.09% 2.17% 2.43% 1.97% 1.62%
Canada 30 Year 2.00% 0.00% 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


0.00% 0.11% 0.11% 3.48% 3.47% 3.45% 3.72% 3.68% 3.39%
US 10 Year 2.50% 0.00% 0.10% -0.18% 2.41% 2.74% 2.86% 3.06% 2.69% 2.41%
CDX IG 60.072 -0.682                

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.