North American equity markets edged higher yesterday

Posted: Thursday, May 16, 2019 - 09:20 EDT

North American equity markets edged higher yesterday, shrugging off the recent tariffs enacted by both the U.S. and China.  European equities are higher this morning with North American equity futures pointing towards a higher open as well.  This follows news from the U.S. administration to delay auto tariffs for 180 days.  This gives some relief to both the Japanese and European countries as the U.S. President was looking to limit or restrict the number of imported vehicles.  However, the premise behind Trump’s auto restriction on imports focuses on the vehicles posing a national-security threat.  Countries that export autos are pushing back as the restraints may violate current WTO trade rules.  Otherwise, the economic calendar remains thin today with the better tone leading to a slightly lower U.S. dollar.  Yields in both Canada and the U.S. are also moving a couple of basis points higher.

Volumes in the Canadian corporate credit market were again thin yesterday.  However, Brookfield Property Finance re-opened a $250mil 5-year bond that priced at +222bps over the curve. This brings the full issuance size of their five year bond to $600mill.  As a result of the small issuance size, the new issue did not drive substantial trading in secondary markets.  The tone in risk assets, along with corporate credit, continues to stabilize leading to some investor activity.  The marginal skew towards better buying was not able to drive spreads tighter, ending 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 2,850.96 0.58% 0.83% 14.59% 6.64% -0.76%

3.43%

7.71% -13.52% 13.65%
TSX

16,318.14

0.21%

1.69%

15.21%

4.44% -4.52%

6.77%

-0.56% -10.11 13.27%

Rates:

 

Today

% Change

QTD change

YTD change

Q4 2017

Q1 2018

Q2 2018

Q3 2018

Q4 2018

Q1 2019

Canada 5 Year

1.56%

-0.01%

0.04%

-0.33% 1.87% 1.97% 2.07% 2.34% 1.89% 1.52%
Canada 10 Year 1.68% -0.01% 0.06% -0.29% 2.05% 2.09% 2.17% 2.43% 1.97% 1.62%
Canada 30 Year 1.91% -0.01% 0.02% -0.27% 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

3.41%

-0.01% 0.02% 0.02% 3.48% 3.47% 3.49% 3.72% 3.68% 3.39%
US 10 Year 2.38% 0.01% -0.02% -0.30% 2.41% 2.74% 2.86% 3.06% 2.69% 2.41%
CDX IG 62.563 -0.895                

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.