Both Canada and the U.S. released retail sales data this morning

Posted: Thursday, April 18, 2019 - 09:25 EDT

Both Canada and the U.S. released retail sales data this morning.  In Canada, consumption in February increased by 0.8%, beating expectations of 0.4% growth.  This reverses three consecutive months of retail sales declines that were driven by a 3.1% increase in new car sales over the past month.  Excluding auto sales, the Canadian economy still exhibited strong consumption spending, increasing by 0.6%.  Also positive were retail sales in volume terms that rose by 0.2% in the month.  In the U.S., retail sales for March also beat expectations for 1.0% growth, rising in the month at a rate of 1.6%.  Similar to Canada, U.S. spending was driven by motor vehicles sales along with purchases at gasoline stations.  Gas prices have creeped higher to start the year which contributed to increased spending.  Excluding autos, spending was broad based across various sectors as retail sales ex auto and gas still improved by 0.9%.  Although consumption data out of Canada and the U.S. will not move the needle on central bank rate hikes, data released this morning suggests that the economy continues to be constructive.

In the Canadian corporate credit market, Bank of America decided to tap the maple market issuing a $1bil 6NC5 bond that priced at +127bps over the curve.  The demand for credit remained robust yesterday with 73 buyers participating in the new issue deal and late fills in the 20-30% range.  In the secondary market, the new bonds continued to tighten by an additional 2bps.  Across other sectors, corporate credit spreads continued to tighten by an additional 1-2bps as a result of the stronger tone.  With the better retails sales data this morning, flows are expected to be skewed towards better buying although the Easter long weekend will most likely lead to lighter volumes.

Equity Markets:

  Index Level % Change QTD YTD Q4 2017 Q1 2018 Q2 2018 Q3 2018 Q4 2018 Q1 2019
S&P 500 2,900.45 -0.23% 2.43% 16.40% 6.64% -0.76%

3.43%

7.71% -13.52% 13.65%
TSX

16,544.24

0.25%

2.86%

16.54%

4.44% -4.52%

6.77%

-0.56% -10.11 13.29%

Rates:

 

Today

% Change

QTD change

YTD change

Q4 2017

Q1 2018

Q2 2018

Q3 2018

Q4 2018

Q1 2019

Canada 5 Year

1.65%

0.01%

0.13%

-0.24% 1.87% 1.97% 2.07% 2.34% 1.89% 1.52%
Canada 10 Year 1.79% 0.01% 0.18% -0.17% 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

3.57%

-0.01% 0.18% 0.18% 3.48% 3.47% 3.45% 3.72% 3.68% 3.39%
US 10 Year 2.56% -0.04% 0.15% -0.13% 2.41% 2.74% 2.86% 3.06% 2.69% 2.41%
CDX IG 56.969 -0.674                

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.