Manufacturers see 'signs of pickup' They have been at the centre of the global economic storm for months, but now even Canadian manufacturers are daring to express a bit of optimism, FP article below
• TSX +10.35 touching its highest level in almost 6 months, as a firmer financial sector overcame weak energy issues, which fell as oil prices sagged.
• DOW -16.09
• Dollar +.42c to 85.64USD The Canadian dollar climbed to its highest level versus the U.S. currency in nearly six months as demand for riskier currencies was on the rise.
• Oil -$.63 to $53.84US per barrel
• Gold +$2.10 to $904.30USD per ounce as weak physical demand and growing risk appetite dented safe-haven demand in the bullion market.
• Canadian 5 yr bond yields - .02bps to 2.00- Four weeks ago it was 1.86.
The yield, 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. 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
Manufacturers see 'signs of pickup'
Paul Vieira, Financial Post OTTAWA -- They have been at the centre of the global economic storm for months, but now even Canadian manufacturers are daring to express a bit of optimism, with many expecting a jump in new orders in the coming months or at the very least demand to have stabilized.
The results are contained in the most recent monthly survey conducted by the Canadian Manufacturers and Exporters, which shows a "markedly more optimistic" outlook in the sector - which has shed roughly 500,000 jobs since 2002 and 110,000 this year alone.
The survey indicated that a "new positive trend" emerged in April, with 63% of manufacturers stating they expect the value of new orders to either stay the same or increase over the next three months.
"I think it may be a sign that we are kind of hitting bottom here," said Jayson Myers, chief executive of the Ottawa industry association. "We are seeing signs of pickup."
However, Mr. Myers warned further hurdles remain for the battered sector, including troubles among members in accessing financing, and the growing threat of U.S. protectionism through so-called "buy America" clauses.
Nevertheless, the CME survey results represent another sign that a recovery is in sight. Ben Bernanke, the chairman of the U.S. Federal Reserve, told Congress on Tuesday demand may be stabilizing.
Further, equity markets and the Canadian dollar have been on a tear in recent weeks, as investors who have stood on the sidelines during the financial crisis unwind their U.S.-dollar positions and take on additional risk in the belief the worst of the crisis is over.
According to the CME survey, conducted between April 13 and 22, 41% of members questioned said they expected orders up until July of 2009 to remain at current levels, and 22% suggested an uptick.
CME said this was "markedly more optimistic" than March's results, when 49% expected new orders to drop; 33% said they remain about the same; and 18% believed orders would increase.
Optimism was most pronounced in the chemicals and plastics sector, Mr. Myers said. This is key, he added, because these are raw materials to be used in building finished products.
As for employment prospects, 36% of manufacturers indicated jobs cuts were likely in the offing. However, CME said that was an improvement from surveys done in March and February, which suggested 42% and 44% of companies intended to reduce payrolls.
On the credit front, the CME survey said 56% of manufacturers reported experiencing trouble getting financing, which was a slight drop from previous surveys.
Mr. Myers said of particular concern was the number of companies indicating they were turned down due to the sector they operate in as opposed to the health of their balance sheet.
"Access to credit is going to remain an issue, and will remain an issue as orders come back," Mr. Myers said. "It is going to be harder [to access financing] as the economy rebounds because you don't have the money coming in but you have the cost of ramping up production again."
In the budget tabled in January, the federal government announced measures totalling $200-billion in an effort to ease the availability of credit. But Mr. Myers said many of initiatives have yet to be implemented - citing, in particular, the $12-billion secured credit facility aimed at reviving the car- and equipment-leasing market
Wednesday, May 6, 2009
Tuesday, May 5, 2009
Financial Update for May 5, 2009
Stocks surge as data encourage hopes world economy is reviving~ Resources lead TSX up almost 4% to 2009 high
It's like watching the market's blood pressure come down," said David Kelly, chief market strategist at JPMorgan Funds in New York. "Every day that goes by without something bad happening is reducing the risk of an economic rebound getting derailed."
• TSX +373.41 to 9,870 as optimism over the health of the global financial sector and the economy in general pushed up issues across all industry groups.
• DOW +214.33The strength has raised hopes that a full-blown recovery is in process. Traders were heartened as the U.S. Commerce Department said construction spending rose 0.3% in March after 5 straight declines.
• Dollar +.90c to 85.22USD
• Oil +$1.27 to $54.47US per barrel
• Gold +$14.00 to $901.60USD per ounce
• Canadian 5 yr bond yields +.02bps to 2.02- Four weeks ago it was 1.88.
http://www.financialpost.com/markets/market_data/money-yields-can_us.html
*The yield, 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. 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
*The yield, 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. 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.
It's like watching the market's blood pressure come down," said David Kelly, chief market strategist at JPMorgan Funds in New York. "Every day that goes by without something bad happening is reducing the risk of an economic rebound getting derailed."
• TSX +373.41 to 9,870 as optimism over the health of the global financial sector and the economy in general pushed up issues across all industry groups.
• DOW +214.33The strength has raised hopes that a full-blown recovery is in process. Traders were heartened as the U.S. Commerce Department said construction spending rose 0.3% in March after 5 straight declines.
• Dollar +.90c to 85.22USD
• Oil +$1.27 to $54.47US per barrel
• Gold +$14.00 to $901.60USD per ounce
• Canadian 5 yr bond yields +.02bps to 2.02- Four weeks ago it was 1.88.
http://www.financialpost.com/markets/market_data/money-yields-can_us.html
*The yield, 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. 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
*The yield, 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. 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.
Monday, May 4, 2009
Financial Update for May 4, 2009
• TSX +172.13
• DOW +44.29
• Dollar +.50c to 84.32USD
• Oil +$2.08 to $53.20US per barrel
• Gold -3.10 to $887.60USD per ounce
• Canadian 5 yr bond yields -.01bps to 2.00- Four weeks ago it was 1.88.
http://www.financialpost.com/markets/market_data/money-yields-can_us.html
Today’s quote from www.canadianmortgagetrends.com that states what we have been saying for a few days now, that we may see a possible rate increase in the future triggered by the bond yields going up and the spread going down
*The yield, 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. 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.
April 29, 2009
5-Year Yields Break Above 2%
Earlier today, 5-year bond yields broke above 2% for the first time in 8 weeks.
Keep an eye on the chart. A further 10-20 basis point increase might prompt certain lenders to start lifting fixed mortgage rates.
If you’re considering a new fixed-rate mortgage or pre-approval, there has never been a better time to apply.
Obama eyes Canada as bank model
TORONTO STAR DAVID OLIVE BUSINESS COLUMNIST
Barack Obama, contemplating sweeping reforms to the U.S. financial system, cited Canada as a model worth emulating in an interview published yesterday.
"You know, I've looked at the evidence so far that indicates that other countries that have not seen some of the problems in their financial markets that we have nevertheless don't separate between investment banks and commercial banks," the U.S. president told New York Times economics columnistDavid Leonhart in a Times Magazine cover story yesterday. "They have a `supermarket' model that they've got strong regulation of."
"Like Canada?" Leonhart asked.
"Canada being a good example," Obama said. "And they've actually done a good job in managing through what was a pretty risky period in the financial markets."
"When it comes to something like investment banking versus commercial banking," Obama said, "the experience in a country like Canada would indicate that good, strong regulation that focuses less on the legal form of the institution and more on the functions that they're carrying out is probably the right approach to take."
Obama praised Canada's banking system in an earlier interview, in advance of the G20 meeting of world leaders in London last month. His more recent comments suggest Obama's economic team is closer to deciding on an approach to a long-anticipated overhaul of financial regulation in America, where the current global financial crisis has its origins.
Wall Street observers worry Obama might push for a breakup of America's largest banks and other financial institutions, often deemed "too big to fail," in order to make them easier to manage prudentially and to regulate.
At the very least, a rough consensus of observers believe, Obama would reinstitute the divorce of commercial from investment banking that Franklin Roosevelt forced in 1933, and which remained in effect until 1999. Not long after, America's disastrous housing boom got underway along with the distribution of "toxic" U.S. subprime, or `junk'," mortgages to lenders worldwide.
But the "Canadian option" of stricter regulations and stronger enforcement of them by a beefed-up existing regulatory regime would best fit Obama's approach of tweaking, rather than overturning, the status quo.
Canadian banks are limited by federal regulation to $20 in loans and other investments for each $1 in capital. The "reserve ratio" in the U.S. and Europe ranges as high as 40:1, a level of risk that some of the biggest world banks proved unable to handle when the U.S. housing boom collapsed in 2007 and default rates on mortgages soared.
All of Canada's six largest banks follow the supermarket model, having absorbed the securities industry and the trust sector in the 1980s. Only insurance, in which the banks merely dabble, remains mostly outside the banks' ambit, despite years of bank lobbying of Ottawa to allow the marketing of a wider range of insurance products.
As a result of their largely shunning the purchase of multimillion-dollar packages of U.S. junk mortgages, Canadian banks have earned international acclaim for their continued sound condition. But that had nothing to do with the Canadian banks' size or diversity of functions, and everything to do with prudent risk decisions and scrupulous regulatory supervision.
Canada's five largest banks now are among the 50 most valuable in the world. A decade ago, none were in those ranks.
• DOW +44.29
• Dollar +.50c to 84.32USD
• Oil +$2.08 to $53.20US per barrel
• Gold -3.10 to $887.60USD per ounce
• Canadian 5 yr bond yields -.01bps to 2.00- Four weeks ago it was 1.88.
http://www.financialpost.com/markets/market_data/money-yields-can_us.html
Today’s quote from www.canadianmortgagetrends.com that states what we have been saying for a few days now, that we may see a possible rate increase in the future triggered by the bond yields going up and the spread going down
*The yield, 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. 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.
April 29, 2009
5-Year Yields Break Above 2%
Earlier today, 5-year bond yields broke above 2% for the first time in 8 weeks.
Keep an eye on the chart. A further 10-20 basis point increase might prompt certain lenders to start lifting fixed mortgage rates.
If you’re considering a new fixed-rate mortgage or pre-approval, there has never been a better time to apply.
Obama eyes Canada as bank model
TORONTO STAR DAVID OLIVE BUSINESS COLUMNIST
Barack Obama, contemplating sweeping reforms to the U.S. financial system, cited Canada as a model worth emulating in an interview published yesterday.
"You know, I've looked at the evidence so far that indicates that other countries that have not seen some of the problems in their financial markets that we have nevertheless don't separate between investment banks and commercial banks," the U.S. president told New York Times economics columnistDavid Leonhart in a Times Magazine cover story yesterday. "They have a `supermarket' model that they've got strong regulation of."
"Like Canada?" Leonhart asked.
"Canada being a good example," Obama said. "And they've actually done a good job in managing through what was a pretty risky period in the financial markets."
"When it comes to something like investment banking versus commercial banking," Obama said, "the experience in a country like Canada would indicate that good, strong regulation that focuses less on the legal form of the institution and more on the functions that they're carrying out is probably the right approach to take."
Obama praised Canada's banking system in an earlier interview, in advance of the G20 meeting of world leaders in London last month. His more recent comments suggest Obama's economic team is closer to deciding on an approach to a long-anticipated overhaul of financial regulation in America, where the current global financial crisis has its origins.
Wall Street observers worry Obama might push for a breakup of America's largest banks and other financial institutions, often deemed "too big to fail," in order to make them easier to manage prudentially and to regulate.
At the very least, a rough consensus of observers believe, Obama would reinstitute the divorce of commercial from investment banking that Franklin Roosevelt forced in 1933, and which remained in effect until 1999. Not long after, America's disastrous housing boom got underway along with the distribution of "toxic" U.S. subprime, or `junk'," mortgages to lenders worldwide.
But the "Canadian option" of stricter regulations and stronger enforcement of them by a beefed-up existing regulatory regime would best fit Obama's approach of tweaking, rather than overturning, the status quo.
Canadian banks are limited by federal regulation to $20 in loans and other investments for each $1 in capital. The "reserve ratio" in the U.S. and Europe ranges as high as 40:1, a level of risk that some of the biggest world banks proved unable to handle when the U.S. housing boom collapsed in 2007 and default rates on mortgages soared.
All of Canada's six largest banks follow the supermarket model, having absorbed the securities industry and the trust sector in the 1980s. Only insurance, in which the banks merely dabble, remains mostly outside the banks' ambit, despite years of bank lobbying of Ottawa to allow the marketing of a wider range of insurance products.
As a result of their largely shunning the purchase of multimillion-dollar packages of U.S. junk mortgages, Canadian banks have earned international acclaim for their continued sound condition. But that had nothing to do with the Canadian banks' size or diversity of functions, and everything to do with prudent risk decisions and scrupulous regulatory supervision.
Canada's five largest banks now are among the 50 most valuable in the world. A decade ago, none were in those ranks.
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