Global credit markets rallied last week on the back of the US-China mini trade agreement, a strong start to earnings season and increased hopes of a Brexit endgame. US major banks reported generally strong results, which fuelled a 7 bp rally in 10-year spreads. Treasury yields rose consistently through the week but remain in the upper end of the range established in September. Overseas, UK Prime Minister Boris Johnson tabled the latest Brexit deal ahead of the October 31st deadline. Investors grew increasingly hopeful that the PM can overcome significant obstacles and generate the votes needed to pass the deal in parliament. European credit tightened by 5-10 bp while UK banks tightened by up to 15 bp.
Canadian credit was relatively subdued but still managed to tighten 1-2 bp on the back of firm global tone. ENMAX issued its hotly anticipated deal on the back of the month-long marketing campaign. The issuer printed $850mm across three tranches and finished the week about 10 bp tighter. The Canadian election appears too close to call, but impact on credit markets should be limited, barring a shock result. Canada will continue to take its cue from the global tone with Brexit resolution potentially the most significant development in the coming week.