Daily Commentary BY THE CURVE TEAM –

Holding Pattern

19th of April, 2018

Global sentiment remains steady during a relatively quiet week.

Following our commentary yesterday, the US yield curve flattened further on the back of a small rise in short-term yields. The market expects short-term yields to continue to track upwards and this is even more likely considering the Fed’s intention to tighten by 0.25% again in June. If they do so, the US cash-rate would’ve increased by 1.00% in just 12 months.

America’s neighbour Canada decided to leave their cash-rate at 1.25% overnight, while at the same time revising their growth forecasts lower. Canada’s economy seems to be tracking along similar to ours, where the growth story remains a slow burner but the next move in the respective cash-rates is likely up.

March employment data is out this morning, with the market expecting a 20k increase in jobs and for the unemployment rate to tick lower to 5.5%. The reading won’t bear a huge amount of weight but nevertheless we should see a rise based on the ongoing strength in business conditions.

James Winder

Associate Director