The U.S. producer price index for July fell

Posted: Thursday, August 10, 2017 - 08:57 EDT

The U.S. producer price index for July fell by 0.1% m/m against expectations of a +0.1% increase.  The unexpected drop in wholesale prices was the first decline in almost a year, potentially indication that inflation will remain benign.  Excluding food and energy, PPI also decreased by 0.1% with decreases in margins at chemical and equipment wholesalers.  U.S. initial claims came in at 244k, marginally higher than the previous month of 241k with continuing claims declining from 1,968k to 1,951k over the month.

Tensions between the U.S. and North Korea continue to drive a risk-off sentiment, with Asian and European equity markets lower across the board.  A similar sentiment was felt in the Canadian corporate credit market yesterday with spreads opening up approximately 1bps wider to start the morning.  Aimia reported Q2 earnings yesterday with EPS matching estimates of $0.17/share.  The company did not provide any concrete details on their future redemption partner, but remains a key priority for the company to continually offer members airline and travel related benefits.  Positive details related to the Aeroplan program include a year over year increase in gross billings in addition to accumulation patterns.  The burn/earn ratio dropped positively to seasonal levels at 84%, although redemptions did tick up marginally in the quarter.  Cominar REIT was still in focus yesterday following their downgrade by DBRS with longer maturities continuing to steepen out.  Overall, volumes continue to remain modest given the summer season.

Equity Markets:

  Index Level % Change QTD YTD Q1 2016 Q2 2016 Q3 2016 Q4 2016 Q1 2017 Q2 2017
S&P 500 2,474.02 -0.04% 2.09% 10.51% 0.96% 2.44% 3.85% 3.82% 6.07% 3.09%
TSX 15,217.33 -0.26% 0.23% -0.46% 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 1.509% -0.04% 0.12% 0.36% 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 2.329% -0.04% 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 3.499% -0.04% 0.14% -0.24% 3.513% 3.324% 3.188% 3.740% 3.632% 3.358%
US 10 Year 2.235% -0.01% -0.07% -0.27% 1.77% 1.47% 1.60% 2.50% 2.39% 2.31%
CDX IG 60.569 1.054                

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.