The BoC will release its monetary policy statement this morning

Posted: Wednesday, December 6, 2017 - 08:40 EST

The Bank of Canada will release its monetary policy statement this morning, although the central bank is largely expected to leave rates unchanged.  Previously, the Bank has noted that growth in the second half of 2017 will slow compared to the first half but still at a positive rate.  In addition, the outlook remains uncertain in regards to NAFTA renegotiations along with global geopolitical developments.  Domestically, the Bank still sees risks related to household debt and a potential slowing of the housing market as a result of higher interest rates.  Employment in Canada continues to be strong with exports and business investment both expected to contribute to GDP growth moving forward.  For the most part, investors have largely dismissed a potential rate hike until next year, with markets pricing in a 67% chance in March.

There continued to be new issuance in the Canadian corporate credit market with IGM Financial pricing $250mil 30-year bonds at +190bps over the curve.  Order books for the new deal exceeded $900mil with 37 buyers and late fills around 10%.  Outside of new issues, there continued to be net buying across all sectors.  With news out that Laurentian Bank will repurchase $89mil of mortgages that they sold to third parties as a result of misrepresentation, spreads widened approximately 10bps on Laurentian deposit notes.  Otherwise, spreads ended the day mostly unchanged.

Equity Markets:

  Index Level % Change QTD YTD Q2 2016 Q3 2016 Q4 2016 Q1 2017 Q2 2017 Q3 2017
S&P 500 2,629.57 -0.37% 4.77% 19.69% 2.44% 3.85% 3.82% 6.07% 3.09% 4.48%
TSX 15,915.68 -0.33% 2.24% 6.79% 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 1.704% -0.02% -0.05% 0.59% 0.569% 0.615% 1.150% 1.119% 1.393% 1.753%
Canada 10 Year 1.890% -0.03%

-0.21%

0.17% 1.059% 0.990% 1.750% 1.625% 1.762% 2.099%
Canada 30 Year 2.185% -0.03% -0.29% -0.13% 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 3.425% -0.03% -0.29% -0.22% 3.324% 3.188% 3.740% 3.632% 3.358% 3.712%
US 10 Year 2.340% -0.01% 0.01% -0.10% 1.47% 1.60% 2.50% 2.39% 2.31% 2.33%
CDX IG 52.063 0.183                

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.