Canadian CPI data for April came in at consensus

Posted: Wednesday, May 15, 2019 - 10:53 EDT

Canadian CPI data for April came in at consensus for the month at an increase of 0.4%.  On a year over year basis, headline inflation is now tracking at 2.0%, moving higher from 1.9% in March.  Inflation overall was driven once again by energy prices, rising 5.7% during the month after increasing at a 6.0% pace in the previous month.  Gasoline prices increase by 10% in April as a result of rising oil prices and new federally imposed carbon taxes in six provinces.  Excluding food and energy, all three measures of core CPI continue to track around the 2.0% mark, ranging from 1.8% to 2.0%.  Clothing and footwear moved higher but was offset by lower prices for recreation and education. 

Retail sales in the U.S. for April declined by 0.2%, which missed expectations for an increase of 0.2%.  Motor vehicle sales, electronics and building materials led the decline during the month, while higher gasoline prices helped to offset some of the decline.  Neither data points out of Canada or the U.S. is expected to materially move the needle on implied hike decisions by the central banks this year.

Yesterday evening, Shaw Communications announced that it will sell its remaining share of Corus stock which would amount to proceeds of $548mil.  The company ended the quarter with approximately $1.3bil of cash and the sale of Corus will further bolster Shaw’s ability to funding spectrum auctions and build out a nationwide wireless network.  The Canadian corporate credit market was again in a risk-off tone as worries from a U.S. and China trade war persisted.  Flows were skewed towards investor selling although 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 2,834.41 0.80% 0.22% 13.90% 6.64% -0.76%

3.43%

7.71% -13.52% 13.65%
TSX

16,284.53

0.56%

1.47%

14.96%

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

1.53%

-0.02%

0.01%

-0.36% 1.87% 1.97% 2.07% 2.34% 1.89% 1.52%
Canada 10 Year 1.64% -0.02% 0.03% -0.32% 2.05% 2.09% 2.17% 2.43% 1.97% 1.62%
Canada 30 Year 1.88% -0.02% -0.01% -0.31% 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

3.38%

-0.02% -0.01% -0.01% 3.48% 3.47% 3.45% 3.72% 3.68% 3.39%
US 10 Year 2.38% -0.03% -0.02% -0.30% 2.41% 2.74% 2.86% 3.06% 2.69% 2.41%
CDX IG 64.882 1.492                

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.