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					Canadian Bond Market Presentation
January 18, 2011



John Braive, Vice-Chairman




CIBC Global Asset Management Inc.   CONFIDENTIAL
Market Review
 Key Developments (Q4’10)

    • BoC on hold at 1.00%, but the market‟s priced for hikes to resume in May 2011. We expect no further
       action until H2‟11. No Fed Funds hike expected until 2012.

    • Longer-term yields rose in response to evidence that the economy had avoided a double-dip recession
       and due to rising concerns that the Fed‟s second round of quantitative easing would lead to higher
       inflation.

    • Yield curve has flattened modestly since end of Q3, as 2-year yields rose 30 bps, while 30-year yields
       rose 18 bps, reflecting rising inflation fears and a resumption of the “risk on” trade.

    • Corporate bonds outperformed GoC and Provincial bonds, given their shorter duration and stable
       spreads. However, all had negative returns for the quarter.

    • DEX Corporate Spread narrowed 2 bps, to 138 bps; up 3 bps YoY. DEX Provincial spread narrowed 2
       bps, to 118 bps; down 10 bps YoY. Investors remain hungry for yield.

    • New issue activity remained strong with total issuance during the quarter at $20.9 BN, with YTD at
       $82.9 BN vs $60.7 BN for same period in ‟09. Issuance was higher that seen in 2009 and 2008.




                                          Source: CIBC Global Asset Management Inc.
CIBC Global Asset Management Inc.                                                                | Page 1
                                                   CONFIDENTIAL
Market Review
 Yields – short-term rates up, long-term yields stable




        5.0

                                                                                              March 2010
        4.0
                                                                                              June 2010
                                                                                              December 2010
        3.0                                                                                   September 2010


        2.0



        1.0



        0.0
              0 yr       5 yrs      10 yrs     15 yrs       20 yrs       25 yrs      30 yrs




            • Yields rose in Q4 as QE2 started, increasing inflation fears and encouraging the
              “risk on” (sell bonds / buy stocks) trade.



                                         Source: CIBC Global Asset Management Inc.
CIBC Global Asset Management Inc.                                                              | Page 2
                                                 CONFIDENTIAL
Market Review
 Yield Curve – Still steep, but flattening trend started




    • The yield curve flattened further in the quarter as longer-term yields rose less than shorter-
     term yields rose as QE2 began.
    • The steep curve anticipates tightening by the Bank of Canada in 2011.
    • Current steepness of the yield curve provides resistance to long rates rising significantly.
                                    Source: PC Bond, a business unit of TSX Inc.
CIBC Global Asset Management Inc.                                                          | Page 3
                                                CONFIDENTIAL
Market Review
 Credit - Corporate Yield Spread



               Dec 31 ’10 +138 bps
               Low: Jan 31, ’86 +28 bps
               High: Dec 29 ’08 +366 bps
               Avg: +95 bps




   • Spreads are still near prior credit crisis levels, and were largely unchanged for the year.
   • We expect continued volatility, but remain overweight given expectations that corporate bonds
     will outperform government bonds over the next year.

                                      Source: PC Bond, a business unit of TSX Inc.
CIBC Global Asset Management Inc.                                                          | Page 4
                                                    CONFIDENTIAL
Market Review
 Credit – Corporate Bond Issuance


                                                   Canadian Corporate New Issuance ($millions)

                                                    $94,700
              $100,000         $89,094
                                                                                                    $82,882
               $80,000
                                                                       $61,359            $60,669
               $60,000

               $40,000

               $20,000

                  $-
                                 2006                2007               2008               2009      2010

            Source: CIBC Global Asset Management


   • Q4 supply was robust at $20.9, and was $82.9 BN in „10 vs $60.7 in ‟09.
   • Maple bond issuance returned, with $4.4 BN in „10 issuance surpassing 2009 levels, but well
     below the ~$25BN level seen in each of ‟06 and „07.
   • Canadian banks were busy issuing in Canada and the U.S.; $26.8 BN issued domestically in „10.
   • The calendar was well managed, helping to keep spreads stable.

                                               Source: PC Bond, a business unit of TSX Inc.
CIBC Global Asset Management Inc.                                                                             | Page 5
                                                                CONFIDENTIAL
Market Review
 Credit – Tier 1




          • Basel III will likely result in the early call of only those Tier 1 bonds with maturity
          dates after 2023. We don‟t hold them in the Model Accounts.
          • Outstanding Tier 1 and older subordinated debt will likely lose capital treatment on a
          straight-line basis from 2013 – 2023. But they are not expected to be called.
          • Basel III subordinated debt issuance will likely resume.
                                    Source: PC Bond, a business unit of TSX Inc.
CIBC Global Asset Management Inc.                                                              | Page 6
                                                  CONFIDENTIAL
Market Review
 Credit - Long Provincial Yield Spread



               Dec 31 ’10 +81 bps
               Low: May 22 ’07 +38 bps
               High: Mar 6 ’09 +153 bps
               Avg: +67 bps




    • Long-term provincial spreads tightened (-6 bps to 81 bps in Q4) in the search for yield and
      longer-duration assets.
    • Overall, provincial spreads tightened 2 bps in the quarter to 118 bps; down 10 year/year.
    • Long-term provincial spreads look expensive as compared to corporates.

                                     Source: PC Bond, a business unit of TSX Inc.
CIBC Global Asset Management Inc.                                                       | Page 7
                                                   CONFIDENTIAL
Canadian Fixed Income
 Sector Returns – DEX Universe Bond Index

            Quarter – As at December 31, 2010                                               1 year – As at December 31, 2010



      Corporate                       -0.5%                                       Provincial                                  8.6%



       Provincial             -0.6%                                                Municipal                                 8.2%



       Municipal             -0.7%                                                Corporate                            7.3%



         Overall            -0.7%                                                     Overall                         6.7%



         Federal    -0.9%                                                            Federal                   5.4%




                                                              Source: PC Bond
                                              DEX Universe Bond Index is a trademark of TSX Inc.

CIBC Global Asset Management Inc.                                                                                       | Page 8
                                                          CONFIDENTIAL
Portfolio Returns
 Periods ending December 31, 2010



                                    CIBC Bond Fund - 29901*



                                                    QTD             1 YEAR           4 YEARS
                                                    (%)              (%)               (%)

                    Portfolio                      -0.54              8.42              6.12


                    Benchmark                      -0.71              6.74              5.56


                    Added Value                     0.17              1.68              0.56


                  * Returns are before fees




                                                       In Canadian dollars
                                           Source: CIBC Global Asset Management Inc.
                                    Performance is shown before management and custodial fees
CIBC Global Asset Management Inc.                                                               | Page 9
                                                        CONFIDENTIAL
Canadian Fixed Income – Active Management
 Attribution – 12 months ending December 31, 2010



           Value Added Activity           Strategy in Period                               Impact        Basis Points



           Duration                       Long
                                                                                                            29



           Sector Allocation              Underweight Gov‟t of Canada
                                                                                                            13



           Term Structure                 Curve to stay steep (bullet)
                                                                                                             6



           Carry                          Overweight Corproates
                                                                                                            78



           Security Selection             Higher beta names                                                 42




                                    Represent characteristics of CIBC Pooled Fixed Income Fund – 80020
                                    Source: PC Bond and CIBC Global Asset Management Inc.
CIBC Global Asset Management Inc.                                                                             | Page 10
                                                          CONFIDENTIAL
Economy – National Bureau of Economic Indicators


                U.S. Personal Income Less Transfers                                                                                         U.S. Nonfarm Payroll
   U.S. Personal Current vs. Average Expansions
                 Income less Transfers Expansion vs. Average Expansions                                                               Current vs. Average Expansions
                                                                                                                               U.S. Nonfarm Payroll Expansion vs. Average Expansions


                                                                                                                105
 105

 104                                                                                                            104


 103                                                             Assuming recession ended in June 2009 (=100)                                                                     Assuming recession ended in June 2009 (=100)
                                                                                                                103

 102
                                                                                                                102

 101
                                                                                                                101
 100
                                                                                                                100
  99

       JUN 07   DEC 07   JUN 08         DEC 08           JUN 09           DEC 09           JUN 10     DEC 10          JUN 07     DEC 07   JUN 08         DEC 08           JUN 09           DEC 09           JUN 10   DEC 10

                         Current Expansion of Personal Income less Transfers                                                                       Current Expansion of Nonfarm Payrolls
                         Average Expansions                                                                                                        Average Expansions

                           Source: Datastream & CIBC Global Asset Manag ement Inc. Calculations
                                                                                                                                            Source: Datastream & CIBC Global Asset Manag ement Inc. Calculations
         • Both income growth and employment are tracking well below prior recoveries.

         • Lack of income growth is a serious headwind.

         • In spite of massive fiscal and monetary stimulus, the economy is expanding well below historic trends.



                                                                     Source: Datastream and CIBC Global Asset Management Inc.
CIBC Global Asset Management Inc.                                                                                                                                                             | Page 11
                                                                                                    CONFIDENTIAL
 Economy – Housing


                    U.S. Months' Supply of Existing Homes
               U.S. Months’ Supply of Existing Homes                                                                 Canadian Housing Valuation: home prices vs. fair value
                                                                                                                               & deviations from fair value (%)
      Months
12

11
                                                                                                            350000                                                                                    130

                                                                                                                                                                                                      120
10
                                                                                                                                                                                                      110

                                                                                                                                                                                                      100
9
                                                                                                            250000                                                                                    90

                                                                                                                                                                                                      80
8
                                                                                                                                                                                                      70

                                                                                                                                                                                                      60




                                                                                                    CDN $
7                                                                                                           150000
                                                                                                                                                                                                      50

                                                                                                                                                                                                      40
6
                                                                                                                                                                                                      30

5                                                                                                           50000
                                                                                                                                                                                                      20

                                                                                                                                                                                                      10

4                                                                                                                                                                                                     0

                                                                                                                                                                                                      -10

       1999    2000   2001   2002     2003        2004   2005   2006    2007   2008   2009   2010           -50000                                                                                    -20

                                                                                                                 1980       1985             1990          1995          2000        2005      2010
                                          U.S. Total Existing Homes
                                                                                                                           deviations from fair value   home prices   fair value


     • An unprecedented run-up in prices has led to an unprecedented supply of homes.
                             Source: Datastream




     • The GoC just introduced measures to restrict the supply of credit to the housing sector.

     • Our valuation model for Canada suggests an extended period of flat prices, like the early 1990‟s.

     • Weak housing impacts consumers‟ spending attitudes.


                                                                      Source: Datastream and CIBC Global Asset Management Inc.
 CIBC Global Asset Management Inc.                                                                                                                                                 | Page 12
                                                                                             CONFIDENTIAL
Economy - Debt


         Canadian Household Credit as % of GDP                                                            U.S. Household Credit as % of GDP
                                                                                                              US Household Credit as % of GDP

                C anadian Hous ehold Credit as % of GD P
                                                                                          90
 90
                                                                                          80
 80
                                                                                          70
 70
                                                                                          60
 60
                                                                                          50
 50
                                                                                          40
 40
                                                                                          30
 30
  1970   1975   1980     1985            1990            1995    2000   2005    2010           55   60   65   70        75       80       85       90       95       00       05         10   15   20

                         Canadi an Househol d Credi t as % of GDP
                                                                                                                             USHousehold Credit as % of GDP
                         T rend
                                                                                                                             Trend
                    Sour ce: D atastr eam & CIBC Gl obal Asse


   • Households have become over extended with record amounts of debt
                                                                                                                   Source: Datastream & CIBC Global Asset Management Inc. Calculations




   • Debt has to be paid back … or written-off.

   • Loan demand will remain soft as attitudes toward debt become more conservative.


                                                                Source: Datastream and CIBC Global Asset Management Inc.
CIBC Global Asset Management Inc.                                                                                                                                                   | Page 13
                                                                                  CONFIDENTIAL
Economy - Savings



                        U.S. U.S. & Canada Savings Rate
                             & Canada Savings Rate                                               • The consumer can‟t do the heavy
                                                                                                   lifting in this recovery.
  20%
                                                                                                 • Lowered return expectations should
                                                                                                   lead to higher savings.
  16%
                                                                                                 • An aging population is increasing
                                                                                                   savings to meet their retirement
  12%                                                                                              needs.

                                                                                                 • Demand for safe income is rising.
   8%                                                                                            • Bonds should benefit.


   4%



        1961   1966   1971   1976       1981      1986    1991     1996    2001   2006


                                             U.S. Savings Rate
                                             Canada Savings Rate

                             Source: Datastream




                                                   Source: Datastream and CIBC Global Asset Management Inc.
CIBC Global Asset Management Inc.                                                                                           | Page 14
                                                                          CONFIDENTIAL
Inflation – Wages



         Canada Average Hourly Earnings vs U.S. Unit LaborCost
           Canada Average Hourly Earnings vs. Unit Labor Cost                                                   • Wage costs are the best predictor of
                                                                                                                  future inflation.
 5%
                                                                                                                • U.S. Unit labour costs – the
 4%                                                                                                               combination of productivity, output
                                                                                                                  and wages – will remain low.
 3%
                                                                                                                • The excess slack in labour markets
 2%                                                                                                               and in industrial capacity should
 1%                                                                                                               persist.

 0%

 -1%

 -2%

 -3%

       1992   1994   1996       1998         2000          2002         2004         2006         2008   2010

                     Canada Average Hourly Earnings - Industrial Aggregate YoY
                     US Unit Labor Cost YoY

                          Source: Datastream & CIBC Global Asset M anag ement Inc. Calculations




                                                           Source: Datastream and CIBC Global Asset Management Inc.
CIBC Global Asset Management Inc.                                                                                                          | Page 15
                                                                                         CONFIDENTIAL
Interest Rates – Trend
The Secular Rally is Intact

                                    Government of Canada – 30-year Yield




    • Interest rates remain in their downward channel.

    • There is a strong correlation between short-term and long-term interest rates.

    • The Federal Reserve and the Bank of Canada will keep administered rates low for an extended period.

    • CIBC GAM forecasts a range of 3.25% to 4.25% for long-term yields.
                               Source: PC Bond, a business unit of TSX Inc. and CIBC Global Asset Management Inc.
CIBC Global Asset Management Inc.                                                                                   | Page 16
                                                           CONFIDENTIAL
Outlook
 Forecast Yield Range


    •       The Bank of Canada will resume raising short-term rates later this year. CGAM
            expects another 0.50% increase under the base case scenario (Sluggish Recovery).
    •       We expect no action from the U.S. Federal Reserve this year.
    •       Longer-term bonds should remain in a trading range given the headwinds of fiscal
            policy, continued deleveraging, and Basel III‟s impact.
                                                              1 YEAR FORECAST
                                                    Economic         Sluggish
                                    Dec 31 2010                                   Deflation
                                                    Expansion        Recovery
                    Probability->                     25%              50%          25%

                 Bank Rate             1.00            2.25             1.50        0.50
                 2 Year                1.67            3.65             2.40        1.00
                 10 Year               3.20            4.40             3.50        2.00


                 Corporate Yield       3.81            4.50             3.75        3.25
                 Corporate Spread      1.41            0.66             0.95        2.00
                 RRB Yield             1.10            2.20             1.85        2.60


                                      Source: CIBC Global Asset Management Inc.
CIBC Global Asset Management Inc.                                                             | Page 17
                                              CONFIDENTIAL
Strategy
 Current



     • Duration neutral vs. index.

     • Overweight mid-term bonds, given expectations that the curve will remain
        steep.

     • Portfolio yield still higher than benchmark (+75 bps at year-end 2010).

     • Selectively adding corporate positions – both investment grade and high yield.




                                     Source: CIBC Global Asset Management Inc.
CIBC Global Asset Management Inc.                                                | Page 18
                                             CONFIDENTIAL
Strategy
 Risks to Outlook




               • Credit spreads widen – risk of European sovereign issues


               • Yields rise markedly – due to higher than forecasted inflation


               • Yield curve flattens – greater tightening than anticipated




                                     Source: CIBC Global Asset Management Inc.
CIBC Global Asset Management Inc.                                                 | Page 19
                                             CONFIDENTIAL

				
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