Canadian GDP for October was flat for the month

Posted: Friday, December 22, 2017 - 09:03 EST

Canadian GDP for October was flat for the month, which was below expectations of +0.2%.  On a year over year basis, GDP growth is increasing at 3.4%.  The flat reading in October was a result of decreased production by oil sands companies.  Non-conventional oil’s contribution to GDP is down 7% since hitting a high back in May.  The unexpected slowdown this month adds to the argument that second half growth in Canada is slowing.  Full year GDP is currently tracking around 3%, although economists are expecting growth to decelerate in 2018 around +2.2%.  In the U.S., core PCE in November ticked up 0.1% to 1.5% and continues to grind higher following the trough reported back in August.  Although core PCE continues to track below the 2% target, consumer spending in November remains positive and should be constructive for the economy and inflation.

The Canadian corporate credit market was muted as markets make the slow grind into the holiday season.  Canadian government yields continue to move higher following the strong retail sales data yesterday.  From a week ago, 10 year government of Canada yields are almost 20bps higher sitting at 2.02% this morning.  At market close, spreads were unchanged from slower activity.

This is the last capital markets update this year.  The FAM team would like to wish everyone a wonderful holiday and a happy new year!

Equity Markets:

  Index Level % Change QTD YTD Q2 2016 Q3 2016 Q4 2016 Q1 2017 Q2 2017 Q3 2017
S&P 500 2,684.57 0.20% 7.04% 22.29% 2.44% 3.85% 3.82% 6.07% 3.09% 4.48%
TSX

16,182.63

0.14% 4.10%

8.73%

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

Mar 31 2016

June 30 2017

Sept 30  2017

Canada 5 Year

1.832%

0.02% 0.08% 0.72% 0.569% 0.615% 1.150% 1.119% 1.393% 1.753%
Canada 10 Year 2.020% 0.03% -0.08% 0.30% 1.059% 0.990% 1.750% 1.625% 1.762% 2.099%
Canada 30 Year 2.250% 0.00% -0.22% -0.06% 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

3.490%

0.00% -0.22% -0.15% 3.324% 3.188% 3.740% 3.632% 3.358% 3.712%
US 10 Year 2.482% 0.00% 0.15% 0.04% 1.47% 1.60% 2.50% 2.39% 2.31% 2.33%
CDX IG 48.465 -0.175                

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.