Financial Update for April 30, 2009

Indexes power ahead

• TSX +68.28
• DOW +168.28 In New York, stocks rallied after the Federal Reserve held interest rates steady, as expected, but issued a slightly more upbeat economic outlook.
• Dollar +1.15c to 83.18USD
• Oil +$.1.05 to $50.97US per barrel
• Gold +6.90 to $900.50USD per ounce
• Canadian 5 yr bond yields +.04bps to 2.01- Four weeks ago it was 1.73.
http://www.financialpost.com/markets/market_data/money-yields-can_us.html
The bond yield was up again, and this time over the 2.00 mark. Four weeks ago it was 1.73. So the spread is down to 1.77%. This may be the time to watch these yields and spreads very closely.

*The yield, which is the rate of return on your bond, can be read through a yield curve, which is the pattern of yields on bonds. This increase in bond yield (and the decrease in spread) is something to watch over the next week or so. If the bond yield continues to go up, the spread will continue to shrink and this could be a trigger for interest rates to rise (with all lenders).

In its statement, the the US Federal bank gave a more upbeat take on the economy than it has recently, although the tone remained cautious. The Fed said that "although the economic outlook has improved modestly since the March meeting, partly reflecting some easing of financial market conditions, economic activity is likely to remain weak for a time."

The statement also said the pace of contraction appears to be somewhat slower, a belief that has helped lift stocks over the last two months

A reading on first-quarter gross domestic product showed the U.S. economy shrank at an annualized rate of 6.1%, much steeper than the 4.7% decline analysts expected, but still narrower than the 6.3% drop in the fourth quarter.