Posted: Wednesday, May 17, 2017 - 08:49 EDT
Eurozone CPI for April came in at 0.4%, which was in line with expectations, with year over year inflation tracking 1.9%. Categories such as recreation/culture boosted inflation from the Easter holiday as well as electricity and gas prices related to housing. President Trump is once again in the headlines, which is adding volatility to both equity and bond markets. There is growing concern around whether the President instructed FBI director Comey to drop the Flynn investigation. New York Fed President Dudley commented yesterday on the pace of unwinding for the $4.5 trillion balance sheet held by the Federal Reserve. Dudley said the aim is to ensure that the drawdown is at a very modest, minor pace and should very much run in the background. He also added that the Fed is going to organize the program in a very careful manner that is well communicated to the markets. Unrolling the large balance sheet will be unprecedented with early estimates calculating the impact on Treasury yields somewhere between 50-100bps. However, there is a lot of uncertainty surrounding these estimates by the Fed.
As a result, ten year Treasury yields are approximately 3bps lower this morning at 2.29%. North West Redwater, yesterday, issued two tranches in the Canadian corporate market. The company priced $750mil 10-year bonds at +125bps over the curve and $750mil 18-year bonds at +163bps over Canada’s. The tone in financials still remains softer, with mixed flows in deposit notes yesterday. Bank deposit notes closed the day slightly wider although spreads in other sectors were generally unchanged.
|Index Level||% Change||QTD||YTD||Q4 2015||Q1 2016||Q2 2016||Q3 2016||Q4 2016||Q1 2017|
|Today||% Change||QTD change||YTD change||Dec 31 2015||March 31 2016||June 30 2016||Sept 30 2016||Dec 31 2016||March 31 2017|
|Canada 5 Year||0.985%||-0.03%||-0.13%||-0.17%||0.727%||0.621%||0.569%||0.615%||1.150%||1.119%|
|Canada 10 Year||1.530%||-0.04%||-0.09%||-0.22%||1.390%||1.225%||1.059%||0.990%||1.750%||1.625%|
|Canada 30 Year||2.195%||-0.03%||-0.11%||-0.16%||2.147%||2.003%||1.714%||1.658%||2.350%||2.302%|
|30yr Generic Corporate A rated Spread||1.260%||0.00%||-0.07%||-0.13%||1.610%||1.510%||1.610%||1.530%||1.390%||1.330%|
|30yr All-in Corporate A rated Yield||3.455%||-0.03%||-0.18%||-0.29%||3.757%||3.513%||3.324%||3.188%||3.740%||3.632%|
|US 10 Year||2.291%||-0.03%||-0.10%||-0.21%||2.28%||1.77%||1.47%||1.60%||2.50%||2.39%|
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.