Canadian housing starts for July increased

Posted: Wednesday, August 9, 2017 - 09:01 EDT

Economic data releases are again quieter in North America this morning.  However, Canadian housing starts for July increased from the prior month up 10k to 222.3k and higher than expectations of 205k.  Most of the new housing starts were in B.C. and Alberta.  After a slow start, the trend in new home construction in Calgary is moving higher back to historical norms.  Overnight, China released July inflation numbers with CPI increasing 1.4% y/y, just below expectations of +1.5%.  Food deflation continued for the sixth straight month, especially related to pork products which was down 15.5% y/y.  Headline inflation still stands below the PBOC government ceiling of 3%.  However, factory inflation related to PPI still increased at a strong pace at 5.5% y/y.  Producer prices remained steady as commodity prices including coal, steel and cement continued to rise.

Geopolitical risks related to North Korea and the U.S. sent investors into safe haven assets yesterday, with gold and U.S. Treasuries moving higher.  Activity in the Canadian corporate credit market remained light to start the week.  Most of the flows surrounded Cominar REIT following the ratings downgrade by DBRS to below investment grade, as buyers stepped in to test the current levels.  Spreads ended the day mostly unchanged to 1bps wider as a result of the softer tone in the markets.

Equity Markets:

  Index Level % Change QTD YTD Q1 2016 Q2 2016 Q3 2016 Q4 2016 Q1 2017 Q2 2017
S&P 500 2,474.92 -0.24% 2.13% 10.55% 0.96% 2.44% 3.85% 3.82% 6.07% 3.09%
TSX 15,256.35 -0.01% 0.49% -0.20% 3.75% 5.06% 5.45% 4.53% 2.41% -1.64%

Rates:

  Today % Change QTD change YTD change March 31  2016 June 30 2016 Sept 30 2016

Dec 31 2016

March 31 2017 June 30  2017
Canada 5 Year 1.516% -0.03% 0.12% 0.37% 0.621% 0.569% 0.615% 1.150% 1.119% 1.393%
Canada 10 Year 1.889% -0.05% 0.13% 0.14% 1.225% 1.059% 0.990% 1.750% 1.625% 1.762%
Canada 30 Year 2.332% -0.03% 0.18% -0.02% 2.003% 1.714% 1.658% 2.350% 2.302% 2.148%
30yr Generic Corporate A rated Spread 1.170% 0.00% -0.04% -0.22% 1.510% 1.610% 1.530% 1.390% 1.330% 1.210%
30yr All-in Corporate A rated Yield 3.502% -0.03% 0.14% -0.24% 3.513% 3.324% 3.188% 3.740% 3.632% 3.358%
US 10 Year 2.246% -0.02% -0.06% -0.25% 1.77% 1.47% 1.60% 2.50% 2.39% 2.31%
CDX IG 60.601 1.416                

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.