Yesterday, the BoC released its business outlook survey

Posted: Tuesday, April 16, 2019 - 09:38 EDT

Yesterday, the Bank of Canada released its business outlook survey for the first quarter of 2019.  The overall business outlook survey indicator declined at the weakest paced since Q3 2016.  There were very few positive highlights within the details that mostly signaled weakness across the board.  Firms continue to see capacity pressures with some participants seeing difficulty meeting demand.  Although labour shortages did decline, employers are still see skill deficiencies particularly in Quebec and BC.  Only future sales growth exhibited positive momentum but continues to run below the long-run averages.  Inflation expectations also declined with fading trade war pressures leading to lower input costs.  Most of the indicators are pointer towards a wider output gap and potentially a slightly longer period before the Canadian economy can reach potential.  Following the survey, the Canadian dollar weakened by approximately three-quarters of a cent against the U.S. dollar while the Canadian government yield curve declined by a couple of basis points.

Today, Albertans will head to the polls for their provincial election.  The majority of polls suggest that the PC party is expected to win a majority which would supplant the current NDP government.  Pipelines and exporting Alberta’s landlocked energy resources have been a contentious election mater.

Yesterday, the Ford Auto Securitization deal priced a $579mil deal across five tranches.  The three senior tranches priced at +47bps, +73bps and +93bps over the curve, respectively.  Outside of yesterday’s deal, the primary market is expected to be quiet leading into the long weekend.  However, there continues to be expectation for potential telecom issuance given the recent spending related to the spectrum auction and Verizon hosting roadshows in Canada last week.  In the secondary market, there continues to be strong demand for corporate credit that carried over from Friday.  To end the day, spreads continued to tighten by 1-2bps given the bias towards investor buying.

Equity Markets:

  Index Level % Change QTD YTD Q4 2017 Q1 2018 Q2 2018 Q3 2018 Q4 2018 Q1 2019
S&P 500 2,905.58 -0.06% 2.60% 16.60% 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




-0.26% 1.87% 1.97% 2.07% 2.34% 1.89% 1.52%
Canada 10 Year 1.77% -0.01% 0.16% -0.19% 2.05% 2.09% 2.17% 2.43% 1.97% 1.62%
Canada 30 Year 2.07% 0.01% 0.18% -0.11% 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% 0.18% 0.18% 3.48% 3.47% 3.49% 3.72% 3.68% 3.39%
US 10 Year 2.56% 0.01% 0.16% -0.12% 2.41% 2.74% 2.86% 3.06% 2.69% 2.41%
CDX IG 56.691 0.265                

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.