It’s been a good January for global equities with the MSCI AC rebounding 6%, the best performance for a month of January since 1994. For the S&P/TSX and S&P 500, it’s even better with a 7% gain MTD, the best showing in 30 years for both indices (on a CAD basis, the S&P/TSX twice as strong because of loonie appreciation).
Yield curve steepening was supportive of risk assets last week with the 10-year/3month spread increasing to 42 bp on the back of higher inflation expectations (recall that for risk assets to continue to do well we need steeper than 50 basis points). To sustain higher inflation expectations, we need more USD depreciation – that means a patient Fed and a trade deal with China. Full Report
** I have prepared this commentary to give you my thoughts on various investment alternatives and considerations which may be relevant to your portfolio. This commentary reflects my opinions alone, and may not reflect the views of National Bank Financial Group. In expressing these opinions, I bring my best judgment and professional experience from the perspective of someone who surveys a broad range of investments. Therefore, this report should be viewed as a reflection of my informed opinions rather than analyses produced by the Research Department of National Bank Financial **