North American markets are pointing to a stronger open

Posted: Thursday, April 11, 2019 - 09:22 EDT

North American markets are pointing to a stronger open as equity-index futures turned higher with European shares rising despite a downbeat session in Asia.  Investor optimism on global stocks has endured as warnings about global economic slowdown abound.  Yesterday’s comments from the ECB, the IMF, and the Federal Reserve minutes on caution over economic pullbacks has reinforced expectations that interest rates should be on hold for the rest of the year.

UK PM May accepted the EU’s offer to extend Brexit to Oct 31st.  She will need to provide a review of progress in June.  She still intends to leave by May 22nd to avoid EU elections.  Although the extension avoided the risk of a disorderly no-deal Brexit on Friday, it sets up a political crisis later on this year and could trigger an immediate backlash that risks destabilizing the government. The Pound was unchanged as the market was already anticipating a delay.  

In Canadian credit, the 600Mhz spectrum auction results were announced.  Total spend was around $3.5bln.  Rogers spent $1.7bln, Telus spent $932mln, Shaw spent $500mln, Bell did not participate, and other smaller players made up the difference.  We do expect some issuance from Rogers down the road given they also have some maturities this year as well.  Roger’s reports on the 18th April so we don’t expect anything until then.   As for others, most of them have enough cash on hand as some have pre-funded already.  The big surprise is Bell not participating.  The company has indicated that they’ve got ample low band spectrum and can “re-farm” existing 850Mhz, and see more importance in the 3.5Ghz auction. Despite the spectrum auction spend, spreads are opening up 1-2bps tighter for longer dated issues.  The reason for this is that the credit curves are steeper, if issuance were to occur, the market is anticipating shorter dated issues as opposed to longer dated ones, thus sending a stronger bid for longer issues. 

Equity Markets:

  Index Level % Change QTD YTD Q4 2017 Q1 2018 Q2 2018 Q3 2018 Q4 2018 Q1 2019
S&P 500 2,888.21 0.35% 1.97% 15.89% 6.64% -0.76%


7.71% -13.52% 13.65%





4.44% -4.52%


-0.56% -10.11 13.27%




% Change

QTD change

YTD change

Q4 2017

Q1 2018

Q2 2018

Q3 2018

Q4 2018

Q1 2019

Canada 5 Year




-0.31% 1.87% 1.97% 2.07% 2.34% 1.89% 1.52%
Canada 10 Year 1.71% -0.02% 0.09% -0.26% 2.05% 2.09% 2.17% 2.43% 1.97% 1.62%
Canada 30 Year 2.00% -0.01% 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


-0.01% 0.11% 0.11% 3.48% 3.47% 3.49% 3.72% 3.68% 3.39%
US 10 Year 2.49% 0.03% 0.09% -0.19% 2.41% 2.74% 2.86% 3.06% 2.69% 2.41%
CDX IG 59.203 -0.225                

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.