Invesco Canada blog

Insights, commentary and investing expertise


Global Market Strategist, Invesco Ltd.
February 24, 2020

Subject | Macro views

Last week both the S&P 500 and Nasdaq Composite indexes hit all-time highs mid-week before falling significantly at the end of the week on fears about the novel coronavirus (also known as COVID-19) impacting economic growth. Concerns about the contagion were amplified by the release of U.S. Purchasing Managers’ Index (PMI) flash data for February.1 The Composite PMI dropped to 49.6 – its first time in contraction territory since the 2013 government shutdown. Manufacturing PMI fell to 50.8 from 51.5 in January, with the coronavirus outbreak being blamed. Services PMI was especially hard hit (falling to 49.4 from 53.4) and is now technically in contraction territory.
 
As of today, Feb. 24, we are seeing a global sell-off in equities and a rush to “risk off” asset classes such as gold and U.S. Treasuries. Bond yields have dropped like a lead balloon on coronavirus fears. As of this writing, the 10-year U.S. Treasury yield is at its lowest level since 2016, and the 30-year is at its lowest level ever.2 The 10-year/3-month yield curve has inverted, and the 10-year/2-year yield curve is close to inverting. I have found that, historically, the 10-year U.S. Treasury yield has been a far better gauge of fear than the VIX – and the 10-year is telling us that there are serious concerns that this contagion will impact global growth.

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Challenges and opportunities within the ESG space


Equity Portfolio Manager
February 20, 2020

Subject | ETFs

As consumers, we’re more aware of the environmental and social impact of our consumption than ever before – and today, awareness has an impact on many people’s investment choices.
 
The growth and attention around ESG (Environmental, Social and Governance) investing within investment communities has progressed at a tremendous pace. In the U.S., ESG assets have grown 38% between 2016 and 2018,and 2019 appears to be no different. Yet as with many things that grow quickly, there can be growing pains, as well.
 
Today’s ESG investors face a few recurring challenges:

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Still not sure about RRSP vs. TFSA? Here’s how to use both


February 19, 2020

Subject | Tax & Estate

Learn how to maximize long-term tax benefits using tax-sheltered or tax-deferred registered plans.
 
One of the biggest benefits of registered plans in Canada is the tax-deferral opportunity on the compound growth inside the plans. In other words, registered plans generally allow investors to avoid the periodic tax on investment income generated; non-registered plans, in contrast, expose investors to annual taxation of income distributions. Without the annual “tax-drag,” investments in registered plans can grow faster than investments in non-registered plans. Given that, which registered plan is best to use? Here are key factors to consider when deciding whether to invest in a Registered Retirement Savings Plan (RRSP) or a Tax-Free Savings Account (TFSA).
 
RRSP contributions are deductible against income, and RRSP redemptions are 100% taxable as income. TFSA contributions are made with after-tax money, and TFSA withdrawals are tax-free. Funds grow inside both plans on a tax-deferred basis.
 
RRSPs and TFSAs are, in fact, designed to be tax neutral, assuming a constant marginal tax rate (MTR). When an investor has a constant MTR throughout his or her working and retirement years, there should be no difference between an RRSP and a TFSA in net after-tax income.

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The market impact of coronavirus has begun to spread


Global Market Strategist, Invesco Ltd.
February 18, 2020

Subject | Macro views

The floodgates are opening. Companies are beginning to warn that the coronavirus outbreak will impact earnings, and stocks have begun to react negatively. Yesterday, Apple announced that the contagion will cause it to miss revenue forecasts for the quarter. The problems are on both the sales and production ends: Most Apple stores in China remain closed, and while Apple factories there have reopened, they are not operating at full capacity but instead are slowly ramping up production. In addition, Tesla and Alibaba have recently provided coronavirus-related earnings warnings. Alibaba has gone so far as to label the coronavirus outbreak a “black swan event.”

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Three key takeaways from the Fed’s Monetary Policy Report


Global Market Strategist, Invesco Ltd.
February 10, 2020

Subject | Macro views

In last week’s blog, I noted that what I would be following most closely that week was the release of the Federal Reserve’s Monetary Policy Report, because it provides insight on what the Fed is thinking. On Friday, the Fed released this semi-annual report in advance of Fed Chair Jay Powell’s Humphrey-Hawkins testimony before Congress on Feb. 11 and 12. As is customary, several special topics were covered in the report. Below, we focus on three key takeaways: U.S. manufacturing, the role of monetary policy rules in times of uncertainty, and the coronavirus epidemic.

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Three issues that could keep global markets reeling


Global Market Strategist, Invesco Ltd.
February 3, 2020

Subject | Macro views

Last week was a momentous one for markets, with coronavirus fears gripping markets and creating a risk-off environment. Stocks sold off while yields on government bonds also fell. Over the course of less than two weeks, the yield on the 10-year U.S. Treasury fell from over 1.8% to 1.51%, and the yield on the 10-year German bund dropped from -0.22% to -0.44%.1
 
This week, I see potential for continued market volatility, both to the upside and the downside. Here are three key issues I’m watching:
 

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