Highlights from the Week in Corporate Credit:
July 1 – July 5, 2019

Global credit held firm in light of a generally subdued trading week due to the Canadian and US public holidays. US credit finished the week about 2-3 bp tighter although the strong US jobs number on Friday generated a headwind for credit as chances of a 50 bp rate cut in July diminished drastically. The energy sector was the clear underperformer as WTI retraced most of the gains from the past two weeks on concerns of global growth and stockpiles. The primary market was quiet as issuers took the week off. Looking ahead, investors are expecting about $65bn in supply for the month of July, about 30% lower than this time last year.

Canadian credit was generally a couple bp tighter for the week, capped off by substantial full-time jobs numbers on Friday. Credit outperformers included consumer discretionary and financials, both tightening around 4 bp. Canadian employment for June posted strong wage growth and capped off a hot labour market for the first half of the year. Canadian government bond yields rose by around 10 bp on the news, revealing the confidence in the economy and proving the case for steady monetary policy while other global powers turn dovish.

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