TSX-86.35
DOW -62.68
Dollar -.73c to 84.81USD
Oil -$2.28 to $56.34US per barrel
Gold +$2.90 to $931.30USD per ounce
Canadian 5 yr bond yields +.01bps to 2.12
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
'Banking crisis over' says CIBC economist
Jobs and housing still must recover
May 16, 2009 JULIAN BELTRAME THE CANADIAN PRESS OTTAWA
The financial crisis that plunged the world into the worst recession in decades is showing signs of having righted itself.
A proclamation of the welcome development came at the same time that data showed the Canadian economy took another hard knock in March, with manufacturing sales falling 2.7 per cent, reversing a February pickup.
The cheerier harbinger is a steady reduction in global credit spreads -- the gaps between interest rates on low-risk government bonds and higher-yielding corporate and other debt -- which suggest that the financial meltdown is on course to being resolved.
"The banking crisis is over,'' declared the headline in a note yesterday from CIBC World Markets chief economist Avery Shenfeld.
"Nobody now expects there's another Lehman out there,'' Shenfeld wrote, referring to the mid-September collapse of U.S. investment bank Lehman Brothers, which jolted financial markets around the world.
"Nor will banks be pushed into a fire sale of assets that would depress valuations of like assets on other banks' balance sheets.''
The three-month London Interbank Offered Rate, a benchmark for lending between banks, was down 10 basis points on the week to 0.84 per cent, reducing bank funding costs.
Some base rates were the lowest since the U.S. subprime mortgage crisis erupted in the summer of 2007.
Pointing to narrowing credit spreads and improved interbank lending, Shenfeld said a turning point in the U.S. crisis was reached with the Obama administration's rescue measures.
Bank of Montreal economist Sal Guatieri said he also was encouraged by narrowing credit spreads.
"It means borrowing costs will be coming down for a wide range of borrowers, because a lot of variable-rate mortgages and a lot of personal and business loans are tied to the LIBOR rates,'' he said.
Guatieri cautioned that weakness remains in the economy and he is not ready to declare an all-clear until he sees improvement in job creation and housing, particularly in the United States.
Yesterday's data on Canadian manufacturing showed that the recovery will not be a "neat, straight-line'' move, noted economist Derek Holt of Scotia Capital.
The surprising 2.7 per cent tumble in factory sales in March left them down 23 per cent from their peak last July, despite a bounce in auto shipments following assembly-plant shutdowns in January and February.
The retreat was widespread, and with more auto sector retrenchment on stream, the manufacturing picture only looks bleaker down the road.
"Manufacturers are reining in production, but not as quickly as sales are plummeting,'' said Grant Bishop at TD Economics.
"Downward pressure on Canadian manufacturers will continue throughout the next two quarters.''
Tuesday, May 19, 2009
Friday, May 15, 2009
Financial Update for May 15, 2009
Home sales jump in April (below) TSX Recovers
TSX +139.69
DOW +46.43
Dollar +.50c to 85.54USD
Oil +$.60 to $58.62US per barrel
Gold +$2.50 to $928.40USD per ounce
Canadian 5 yr bond yields +.02bps to 2.11-
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
Home sales jump in April
Third straight monthly increase puts numbers up 32% from January's decade-long low, but still far below last year
HEATHER SCOFFIELD
Globe and Mail Update
May 14, 2009 at 12:21 PM EDT
OTTAWA — Home sales picked up in April for the third month in a row, but the real estate market has not yet made up for all the lost momentum of the past year, the Canadian Real Estate Association says.
Sales of homes in Canada, seasonally adjusted, jumped 11.2 per cent in April compared to March, the largest month-to-month increase in more than five years, CREA said. The gain compounds advances of 10.3 per cent in February and 7.7 per cent in March.
Home sales volumes were a full 32 per cent above January's levels – the lowest levels in a decade.
Compared to a year ago, however, home sales were down 11.8 per cent, CREA said. Still, this is a far milder decline than the record year-over-year drop of 42.2 per cent in November.
Prices are still lower now than a year ago, with the average sale price in April at $306,366 – about 3.2 per cent lower than April, 2008, when prices hit their pre-recession peak.
The volume of homes trading hands rose in 70 per cent of local markets in April, compared to March, CREA added. In particular, Toronto saw a 10 per cent increase, Vancouver's sales rose 30 per cent, Montreal was up 15 per cent and Calgary was up 31 per cent.
Still, compared to a year ago, home sales in Toronto were 10.5 per cent lower, Vancouver was off 17.4 per cent, Montreal was down 4.3 per cent and Calgary was 21 per cent lower.
The only cities showing a year-over-year increase in sales were Kitchener-Waterloo in southern Ontario, and Ottawa.
The key to the substantial increase in sales in the past few months is a growing realization by sellers that pricing has to be realistic, said Dale Ripplinger, a real estate broker based in Regina and also the president of CREA.
“Price adjustments in some markets have helped affordability. Second, lenders do have money for people and properties that qualify, although some are being more stringent.”
A recovery of consumer confidence has also helped boost sales in the housing market, he said.
Also encouraging a more stable housing market is a continuing decline in the supply of homes coming on to the market, CREA noted. New listings in April (seasonally adjusted) were 1.8 per cent lower than in March, and 16.4 per cent lower than the peak of May, 2008.
The spring housing market has been more active than CREA had anticipated, prompting a small upward revision to its forecast for sales for the rest of 2009.
For 2009, CREA now expects sales to fall 14.7 per cent to 307,500 homes – slightly less than in its last forecast issued in February. Stronger-than-expected rebounds in British Columbia and Ontario were the drivers behind the revision, CREA said.
2010 should bring a 7.2 per cent increase in sales – a slightly weaker rebound than in previous forecasts because of downgraded expectations for economic growth next year. The rebound is expected to be strongest in British Columbia and Alberta.
CREA economist Gregory Klump said he expects national average prices will rebound slowly from the low reached in January, and begin to post modest year-over-year increases during the fourth quarter of 2009.
TSX +139.69
DOW +46.43
Dollar +.50c to 85.54USD
Oil +$.60 to $58.62US per barrel
Gold +$2.50 to $928.40USD per ounce
Canadian 5 yr bond yields +.02bps to 2.11-
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
Home sales jump in April
Third straight monthly increase puts numbers up 32% from January's decade-long low, but still far below last year
HEATHER SCOFFIELD
Globe and Mail Update
May 14, 2009 at 12:21 PM EDT
OTTAWA — Home sales picked up in April for the third month in a row, but the real estate market has not yet made up for all the lost momentum of the past year, the Canadian Real Estate Association says.
Sales of homes in Canada, seasonally adjusted, jumped 11.2 per cent in April compared to March, the largest month-to-month increase in more than five years, CREA said. The gain compounds advances of 10.3 per cent in February and 7.7 per cent in March.
Home sales volumes were a full 32 per cent above January's levels – the lowest levels in a decade.
Compared to a year ago, however, home sales were down 11.8 per cent, CREA said. Still, this is a far milder decline than the record year-over-year drop of 42.2 per cent in November.
Prices are still lower now than a year ago, with the average sale price in April at $306,366 – about 3.2 per cent lower than April, 2008, when prices hit their pre-recession peak.
The volume of homes trading hands rose in 70 per cent of local markets in April, compared to March, CREA added. In particular, Toronto saw a 10 per cent increase, Vancouver's sales rose 30 per cent, Montreal was up 15 per cent and Calgary was up 31 per cent.
Still, compared to a year ago, home sales in Toronto were 10.5 per cent lower, Vancouver was off 17.4 per cent, Montreal was down 4.3 per cent and Calgary was 21 per cent lower.
The only cities showing a year-over-year increase in sales were Kitchener-Waterloo in southern Ontario, and Ottawa.
The key to the substantial increase in sales in the past few months is a growing realization by sellers that pricing has to be realistic, said Dale Ripplinger, a real estate broker based in Regina and also the president of CREA.
“Price adjustments in some markets have helped affordability. Second, lenders do have money for people and properties that qualify, although some are being more stringent.”
A recovery of consumer confidence has also helped boost sales in the housing market, he said.
Also encouraging a more stable housing market is a continuing decline in the supply of homes coming on to the market, CREA noted. New listings in April (seasonally adjusted) were 1.8 per cent lower than in March, and 16.4 per cent lower than the peak of May, 2008.
The spring housing market has been more active than CREA had anticipated, prompting a small upward revision to its forecast for sales for the rest of 2009.
For 2009, CREA now expects sales to fall 14.7 per cent to 307,500 homes – slightly less than in its last forecast issued in February. Stronger-than-expected rebounds in British Columbia and Ontario were the drivers behind the revision, CREA said.
2010 should bring a 7.2 per cent increase in sales – a slightly weaker rebound than in previous forecasts because of downgraded expectations for economic growth next year. The rebound is expected to be strongest in British Columbia and Alberta.
CREA economist Gregory Klump said he expects national average prices will rebound slowly from the low reached in January, and begin to post modest year-over-year increases during the fourth quarter of 2009.
Thursday, May 14, 2009
Financial Update for May 14, 2009
TSX -368.19
DOW -184.22
Dollar -1.02c to 85.04USD
Oil -$.83 to $58.02US per barrel
Gold +$2.00 to $925.50USD per ounce
Canadian 5 yr bond yields -.01bps to 2.09- (could be more fallout today)
http://www.financialpost.com/markets/market-data/money-yields-can_us.html?tmp=yields-can_us
“The TSX is down 3% (300 points or so) on worse than expected retail sales in the U.S.
Retail sales dropped slightly in April, but the markets expected no change. So people are really starting to think that maybe we haven’t turned the corner yet.
Bond yields have dropped on the news as people are selling stock and putting their money back into fixed income. I don’t have 5 year bond info (yet) but the yield on the 10 year bond is down 4 bps. So that should relieve some of the pressure that was building for an increase in fixed interest rates.”
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
New figures undermine hints of recovery
JULIAN BELTRAME THE CANADIAN PRESS OTTAWA
Hold off on the talk about "green shoots'' and an economic recovery being just around the corner.
New data yesterday indicated that although there is reason to believe the economy is no longer in free-fall, it is still sliding toward a bottom not yet visible.
Retail sales in the United States fell 0.4 per cent in April, far worse than the flat reading economists anticipated, confirming that the American shopper is still dormant. In Canada, credit rating agency DBRS said conditions for domestic airlines are typical of past recessions, with first-quarter passenger traffic down three to six per cent.
This follows Tuesday's mixed report on bankruptcies -- consumer defaults alarmingly up; business insolvencies unexpectedly down.
One harbinger of global economic activity is demand for energy, and despite all the talk of a rebound in China and better conditions in the U.S., this appears to be muted, according to the Organization of Petroleum Exporting Countries. The oil cartel has lowered its estimate for world oil consumption for the ninth consecutive month.
Analysts believe conjecture about green shoots -- delicate signs of revival sprinkled among the economic desolation -- has overshadowed the risk that conditions could deteriorate further.
"I think it was the combination of the stock markets doing so well in March and April, and then we had that good employment report on Friday; people were getting ahead of themselves,'' said Dale Orr, a Toronto economist and consultant. "I still say it's going to be the fourth quarter until we see any growth at all.''
Even this forecast, which coincides with the Bank of Canada's projection, comes with caveats, including that there won't be another major financial-sector failure or that the broken North American auto sector won't finally expire.
Hard data over the past months are consistent with a severe recession, not growth, said CIBC economist Meny Grauman. Often-cited retail sales figures earlier in the year appeared solid only in contrast to the "horrid'' results of the previous months, he said.
And while housing markets are showing signs of nearing bottom, there is scant evidence of a rebound in prices or construction.
Friday's report of 36,000 new Canadian jobs in April, all in self-employment, provided the most encouraging signal since November. But it should be regarded as little more than a snapshot that may not be indicative of a trend, said Orr.
Economists like to put labour force numbers into a rolling three-month average to obtain a clearer picture. On that basis, Canada lost 108,000 jobs in the past three months, better than the 234,000 that vanished in the previous three months, but little to cheer about.
Extended over a full year, the recent numbers would translate into more than 400,000 job losses.
The clearest green light for the economy is being sent by stock markets, which until this week's reversal had rebounded strongly from early March. Investor exuberance has gone far beyond what was justified. "If you have a near-death experience, all the mundane things seem a lot sweeter,'' he explained.
DOW -184.22
Dollar -1.02c to 85.04USD
Oil -$.83 to $58.02US per barrel
Gold +$2.00 to $925.50USD per ounce
Canadian 5 yr bond yields -.01bps to 2.09- (could be more fallout today)
http://www.financialpost.com/markets/market-data/money-yields-can_us.html?tmp=yields-can_us
“The TSX is down 3% (300 points or so) on worse than expected retail sales in the U.S.
Retail sales dropped slightly in April, but the markets expected no change. So people are really starting to think that maybe we haven’t turned the corner yet.
Bond yields have dropped on the news as people are selling stock and putting their money back into fixed income. I don’t have 5 year bond info (yet) but the yield on the 10 year bond is down 4 bps. So that should relieve some of the pressure that was building for an increase in fixed interest rates.”
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
New figures undermine hints of recovery
JULIAN BELTRAME THE CANADIAN PRESS OTTAWA
Hold off on the talk about "green shoots'' and an economic recovery being just around the corner.
New data yesterday indicated that although there is reason to believe the economy is no longer in free-fall, it is still sliding toward a bottom not yet visible.
Retail sales in the United States fell 0.4 per cent in April, far worse than the flat reading economists anticipated, confirming that the American shopper is still dormant. In Canada, credit rating agency DBRS said conditions for domestic airlines are typical of past recessions, with first-quarter passenger traffic down three to six per cent.
This follows Tuesday's mixed report on bankruptcies -- consumer defaults alarmingly up; business insolvencies unexpectedly down.
One harbinger of global economic activity is demand for energy, and despite all the talk of a rebound in China and better conditions in the U.S., this appears to be muted, according to the Organization of Petroleum Exporting Countries. The oil cartel has lowered its estimate for world oil consumption for the ninth consecutive month.
Analysts believe conjecture about green shoots -- delicate signs of revival sprinkled among the economic desolation -- has overshadowed the risk that conditions could deteriorate further.
"I think it was the combination of the stock markets doing so well in March and April, and then we had that good employment report on Friday; people were getting ahead of themselves,'' said Dale Orr, a Toronto economist and consultant. "I still say it's going to be the fourth quarter until we see any growth at all.''
Even this forecast, which coincides with the Bank of Canada's projection, comes with caveats, including that there won't be another major financial-sector failure or that the broken North American auto sector won't finally expire.
Hard data over the past months are consistent with a severe recession, not growth, said CIBC economist Meny Grauman. Often-cited retail sales figures earlier in the year appeared solid only in contrast to the "horrid'' results of the previous months, he said.
And while housing markets are showing signs of nearing bottom, there is scant evidence of a rebound in prices or construction.
Friday's report of 36,000 new Canadian jobs in April, all in self-employment, provided the most encouraging signal since November. But it should be regarded as little more than a snapshot that may not be indicative of a trend, said Orr.
Economists like to put labour force numbers into a rolling three-month average to obtain a clearer picture. On that basis, Canada lost 108,000 jobs in the past three months, better than the 234,000 that vanished in the previous three months, but little to cheer about.
Extended over a full year, the recent numbers would translate into more than 400,000 job losses.
The clearest green light for the economy is being sent by stock markets, which until this week's reversal had rebounded strongly from early March. Investor exuberance has gone far beyond what was justified. "If you have a near-death experience, all the mundane things seem a lot sweeter,'' he explained.
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