There is an expectation this week for additional ABS issuance

Posted: Wednesday, October 11, 2017 - 08:39 EDT

Tensions in Catalonia have calmed somewhat following the Catalan President’s address that he would suspend any current actions towards independence following last week’s independence vote.  He indicated that he would engage in dialogue with the Spanish Prime Minister, following the widespread notion from the European Union that the vote was illegal.  Spain equity markets as a result have reversed from yesterday – up more than 1% this morning.  Chicago Fed president Evans is speaking this morning and noted that the fundamentals of the U.S. economy look very strong.  If anything, he expects fundamentals to improve further, however reiterating a similar tone of other Fed officials that wage growth has not been as strong as expected.  Overall, Evans views weak productivity as a primary factor holding wages back, although he also expect incomes to improve slowly.  He also commented that the global and European economies have strengthened.

It was a quiet day to start the week yesterday following the holiday long weekend.  There was no new supply in the Canadian corporate credit space although secondary volumes were focused around bank deposit notes.  There is an expectation this week for additional ABS issuance with GM Financial Canada engaging a consortium of banks to issue a GM auto lease program.  Credit spreads were anywhere from unchanged to a basis point tighter to end the day.

Equity Markets:

  Index Level % Change QTD YTD Q2 2016 Q3 2016 Q4 2016 Q1 2017 Q2 2017 Q3 2017
S&P 500 2,550.64 0.23% 1.31% 15.73% 2.44% 3.85% 3.82% 6.07% 3.09% 4.48%
TSX 15,770.36 0.27% 0.96% 5.45% 5.06% 5.45% 4.53% 2.41% -1.64% 3.68%

Rates:

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

March 31 2017

June 30  2017 Sept 30 2017
Canada 5 Year 1.777% 0.00% 0.02% 0.66% 0.569% 0.615% 1.150% 1.119% 1.393% 1.753%
Canada 10 Year 2.122% 0.00% 0.02% 0.50% 1.059% 0.990% 1.750% 1.625% 1.762% 2.099%
Canada 30 Year 2.484% -0.01% 0.01% 0.18% 1.714% 1.658% 2.350% 2.302% 2.148% 2.472%
30yr Generic Corporate A rated Spread 1.240% 0.00% 0.00% -0.09% 1.610% 1.530% 1.390% 1.330% 1.210% 1.240%
30yr All-in Corporate A rated Yield 3.724% -0.01% 0.01% 0.09% 3.324% 3.188% 3.740% 3.632% 3.358% 3.712%
US 10 Year 2.347% -0.01% 0.01% -0.04% 1.47% 1.60% 2.50% 2.39% 2.31% 2.33%
CDX IG 54.633 0.363                

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.