TSX -16.44
DOW +50.34
Dollar +.28c to 86.06USD after Stats Canada reported the country's merchandise trade surplus increased to $1.1 billion in March from $26 m in February, as imports fell faster than exports.
Oil +$.35 to $58.85US per barrel
Gold +$10.40 to $923.90USD per ounce
Canadian 5 yr bond yields +.03bps to 2.10-
http://www.financialpost.com/markets/market-data/money-yields-can_us.html?tmp=yields-can_us
The yield, 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 is something to watch. 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
Info below is from the US, however still valuable and relative to issues of the day as to what is happening in other markets. We can learn from other markets and identify future trends for our market
Fed Chief Bernanke Defends Stress Tests of Major Banks
Wall Street Journal (05/12/09) P. A5; Derby, Michael S.
In a May 11 speech, Federal Reserve Chairman Ben Bernanke stood behind stress tests conducted on the nation's biggest banks, addressing criticism that they were too easy and understated banks' financial challenges. Bernanke acknowledged that predicting credit losses in the current economy is difficult but said the capital estimates are based on "pessimistic potential outlooks" and are therefore "appropriately conservative."
We're Dull, Small Banks Say, And Have Profit to Show for It
New York Times (05/12/09) P. A1; Segal, David
In recent months, community bankers have mounted PR campaigns to tout their fiscal health and to announce their rejection of Troubled Asset Relief Program funds.
Community banks hold less than 10 percent of the $13.8 trillion in bank assets nationwide, and their sound lending practices have shielded them from the worst of the recession and corresponding credit crunch. The 50 or so bank failures have been primarily clustered in states such as Californiaand Floridawhere the bursting housing bubble has had the greatest impact. In such states as Indiana where property values never skyrocketed, community banks have been on solid footing throughout the crisis.
U.S. Projects Aid Tally for Mortgage Giants
Washington Post (05/12/09) P. A16; Goldfarb, Zachary A.
Fannie Mae and Freddie Mac could need $92.2 billion more to cover their rising losses on mortgage-related investments, according to budget details from the Obamaadministration. The additional funds could raise the cost of taking over the mortgage finance giants to $171.1 billion for taxpayers. The budget report also discusses the potential fate of Fannie Mae and Freddie Mac, including a possible return to their previous status, but adds that the White House plans to work with Congress, regulatorsand the mortgage industry on a long-term role for the companies.
Wednesday, May 13, 2009
Financial Update for May 12, 2009
• TSX -143.85
• DOW -155.88
• Dollar -1.20c to 85.78USD
• Oil -$.13 to $58.50US per barrel
• Gold -$1.40 to $913.00USD per ounce
• Canadian 5 yr bond yields - .07bps to 2.07- Four weeks ago it was 1.85. The spread today vs the 5 year rate is now down to 1.71%
• http://www.financialpost.com/markets/market-data/money-yields-can_us.html?tmp=yields-can_us NEW LINK
Spreads have really come down and not sure how long this is going to last. If bond yields get any higher rates could start to move up. The Banks could be keeping the rates artificially low because of the spring season and don’t wish to be perceived as making things harder for consumers. If the stock market is down today we may see an easing on the bond yield side (bond yield will drop). Keep watching them and if they continue to rise, I expect we will see a rate increase
The yield, 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 is something to watch. 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
Canada's rebound lagging, OECD says
JULIAN BELTRAME THE CANADIAN PRESS OTTAWA
The Canadian economy remains in the grip of "strong slowdown'' despite the first baby steps of growth appearing in other parts of the world, a new report from the Organization for Economic Co-operation and Development shows.
The OECD says China is leading the world in a potential rebound from the world's most severe slump since the Great Depression, with the United Kingdom, France and Italy also showing signs that the economic slide is bottoming out.
The positive indicators in these countries are "tentative'' and "weak,'' the international think-tank says, but "they are present in a majority of the (composite leading indicators) component series.''
The rest of the industrialized world, including Canada, however, faces more economic deterioration, the think-tank says, although at a slowing pace.
The OECD's monthly data on economic indicators sensitive to expectations of future activity shows Canada's index falling for the fifth straight month, by 0.4 points in March. That puts it down 10.2 points over the past year, both numbers below the average for the 29 countries in the survey.
The report is at odds with Ottawa's oft-repeated boast that Canada will lead most major economies out of recession, and will bounce back higher.
Liberal finance critic John McCallum charged the federal government is partly to blame for Canada lagging behind some other economies, charging that Ottawa has been slow-footed in spending billions earmarked in January's budget for shovel-ready infrastructure.
"If you don't get your fiscal stimulus money out, you may as well not have a fiscal stimulus because it doesn't do one bit of good,'' he said.
"I don't think they can point to one job being created, for example, for infrastructure.''
Transport Minister John Baird, who is responsible for infrastructure, responded that the government has already given municipalities July's gas tax money and are moving quickly on construction projects.
The OECD report was not a surprise to most economists, many of whom have disputed Prime Minister Stephen Harper's contention that Canada would lead the world in coming out of recession.
Canada's dependence on exports to the U.S., China and other countries suggests that the country's economy depends on recovery outside its borders to boost demand for its products.
"At best, we've seen early signs Canada and the U.S. may be entering a period of more moderate decline rather than growth, but in East Asia we're seeing convincing signs that they are past the trough,'' said Avery Shenfeld, chief economist with CIBC World Markets.
China's resurgence would be good news for Canada, he adds, boosting demand for the country's base metals.
"Non-energy commodity prices typically rise in the early stages of recovery, or even before, in part due to the fact that firms must rebuild inventories before they can reactivate production lines,'' he said.
The OECD report is only the most recent voice sighting so-called "green shoots'' that are giving economists, investors and governments hope that the global economic and financial crisis is approaching a bottom.
European Central Bank president Jean-Claude Trichet also noted that growth has returned to some countries, although he cautioned that uncertainty remains high.
Even in North America, talk of seeing the light at the end of the tunnel is growing bolder with each encouraging, or less-than-awful, economic indicator.
Canada saw its first positive jobs report in six months in April, with employment registering a modest 36,000 jobs gain, although all came in the self-employment category.
• DOW -155.88
• Dollar -1.20c to 85.78USD
• Oil -$.13 to $58.50US per barrel
• Gold -$1.40 to $913.00USD per ounce
• Canadian 5 yr bond yields - .07bps to 2.07- Four weeks ago it was 1.85. The spread today vs the 5 year rate is now down to 1.71%
• http://www.financialpost.com/markets/market-data/money-yields-can_us.html?tmp=yields-can_us NEW LINK
Spreads have really come down and not sure how long this is going to last. If bond yields get any higher rates could start to move up. The Banks could be keeping the rates artificially low because of the spring season and don’t wish to be perceived as making things harder for consumers. If the stock market is down today we may see an easing on the bond yield side (bond yield will drop). Keep watching them and if they continue to rise, I expect we will see a rate increase
The yield, 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 is something to watch. 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
Canada's rebound lagging, OECD says
JULIAN BELTRAME THE CANADIAN PRESS OTTAWA
The Canadian economy remains in the grip of "strong slowdown'' despite the first baby steps of growth appearing in other parts of the world, a new report from the Organization for Economic Co-operation and Development shows.
The OECD says China is leading the world in a potential rebound from the world's most severe slump since the Great Depression, with the United Kingdom, France and Italy also showing signs that the economic slide is bottoming out.
The positive indicators in these countries are "tentative'' and "weak,'' the international think-tank says, but "they are present in a majority of the (composite leading indicators) component series.''
The rest of the industrialized world, including Canada, however, faces more economic deterioration, the think-tank says, although at a slowing pace.
The OECD's monthly data on economic indicators sensitive to expectations of future activity shows Canada's index falling for the fifth straight month, by 0.4 points in March. That puts it down 10.2 points over the past year, both numbers below the average for the 29 countries in the survey.
The report is at odds with Ottawa's oft-repeated boast that Canada will lead most major economies out of recession, and will bounce back higher.
Liberal finance critic John McCallum charged the federal government is partly to blame for Canada lagging behind some other economies, charging that Ottawa has been slow-footed in spending billions earmarked in January's budget for shovel-ready infrastructure.
"If you don't get your fiscal stimulus money out, you may as well not have a fiscal stimulus because it doesn't do one bit of good,'' he said.
"I don't think they can point to one job being created, for example, for infrastructure.''
Transport Minister John Baird, who is responsible for infrastructure, responded that the government has already given municipalities July's gas tax money and are moving quickly on construction projects.
The OECD report was not a surprise to most economists, many of whom have disputed Prime Minister Stephen Harper's contention that Canada would lead the world in coming out of recession.
Canada's dependence on exports to the U.S., China and other countries suggests that the country's economy depends on recovery outside its borders to boost demand for its products.
"At best, we've seen early signs Canada and the U.S. may be entering a period of more moderate decline rather than growth, but in East Asia we're seeing convincing signs that they are past the trough,'' said Avery Shenfeld, chief economist with CIBC World Markets.
China's resurgence would be good news for Canada, he adds, boosting demand for the country's base metals.
"Non-energy commodity prices typically rise in the early stages of recovery, or even before, in part due to the fact that firms must rebuild inventories before they can reactivate production lines,'' he said.
The OECD report is only the most recent voice sighting so-called "green shoots'' that are giving economists, investors and governments hope that the global economic and financial crisis is approaching a bottom.
European Central Bank president Jean-Claude Trichet also noted that growth has returned to some countries, although he cautioned that uncertainty remains high.
Even in North America, talk of seeing the light at the end of the tunnel is growing bolder with each encouraging, or less-than-awful, economic indicator.
Canada saw its first positive jobs report in six months in April, with employment registering a modest 36,000 jobs gain, although all came in the self-employment category.
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