• TSX -323.20 to 11,071(Reuters) hit by a mix of soft commodity prices and weak data from the United States that raised concerns about the strength of economic recovery. TSX remains a staggering 48% above the 5-year low it tumbled to in March
• DOW -203.00Discouraging new reports on unemployment and manufacturing reinforced worries that job losses and meagre factory output will make for a weak recovery as the nation climbs out of the worst recession in decade
• Dollar -1.19c to 93.40USD lost the full cent it gained Wed
• Oil +$.21 to $70.82US per barrel.
• Gold -$8.50 to $999.50USD per ounce
• Canadian 5 yr bond yields -.07bps to 2.51. The spread, based on 5 yr rate of 4.09% is 1.58% We are inside the comfort zone again, for the first time since Sept. 11th
• 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. Ideally lenders are looking for a spread between 1.55 and 1.75
Bulls retreat as markets brace for more gloom
Alia McMullen, Financial Post
North American stocks started the fourth quarter with a sharp drop Thursday, as disappointing U.S. manufacturing figures added to brewing anxiety about the strength of the economic recovery.
Even surprise jumps in U.S. personal spending, pending home sales and construction figures were unable to calm investors, who were determined to act cautiously ahead of Friday's non-farm payrolls figures.
"The general tone to the data is that it is at least as good as expected and in some cases much more so, but markets have priced in perfection such that only very upside surprises to indicators will matter," said Derek Holt, an economist at Scotia Capital.
"It also seems that investors may be coming around to the idea that the mixed data we keep getting suggests that the path to recovery may be a lot slower and harder than had previously been hoped," said Colin Cieszynski, a market analyst at CMC Markets Canada.
The mixed bag of data was largely positive Thursday, with personal spending in the United States up 1.3% - the fourth consecutive monthly gain and the strongest increase since late 2001. That was well above the 0.2% gain in personal income, pulling the savings rate down to 3% from 4%.
"The solid rise in consumer spending in August is heartening and is expected to be a key factor sending overall GDP back into positive growth territory in the third quarter," said Paul Ferley, assistant chief economist at RBC Capital Markets. However, he said the bulk of the jump was attributable to the federal government's "cash for clunkers" car purchasing incentive, an initiative which finished at the end of August. As a result, future spending figures may not be as strong.
Other data showed construction spending up 0.8% in August and pending home sales up 6.4%, also above expectations. However, the positive results were overshadowed by a decline in U.S. manufacturing activity.
The Institute for Supply Management's manufacturing index, which was expected to rise, slipped to 52.6 in September from 52.9 the previous month. The decline was small and the index remained above the critical 50 level that separates expansion from contraction.
However, the unexpected softness was compounded by weak manufacturing data from around the globe. The manufacturing purchasing managers index in China came in below expectations at 54.3, while the U.K. also missed the mark at 49.5.
"The pullback in momentum in the manufacturing sector simply reflects the underlying reality that when you strip away the various fiscal stimulus programs and measures, there is not much underlying strength in spending in the economy," said Brian Bethune, the chief U.S. financial economist at IHS Global Insight.
The soft factory data combined with a drop in Monster Worldwide Inc.'s measure of online job ads and a further increase in those seeking unemployment benefits suggested Friday's U.S. non-farm payrolls figures could come in worse than expected. The market had expected job losses of about 175,000 from Friday's report after 216,000 jobs were lost in August. However, Jan Hatzius, the chief U.S. economist at Goldman Sachs Group said the latest data suggested losses would be higher. He revised outlook to a decline of 250,000 jobs in September from a 200,000 drop previously.
