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Daily Market Commentary

As oil retreated yesterday, so did the bonds.  Most of the action was south of the border, where the benchmark ten year dropped three-quarters of a point (gained 8 bps).  This could have been aided by Fed-speak, as Janet Yellen - President of the San Fran Fed spoke on inflation:

"This is not the 1970s, but we can't let it get to be the 1970s.  Our behaviour is critical to that.  We have to be the barrier"

We're not exactly sure what she means by that.  Does that mean we shouldn't demand pay hikes as our costs go up?  Because if we ALL adhere to that rule, she's right.  We will be the barrier.  Let's make a pact....

The credit markets were slightly weaker going into yesterday, but firmed up somewhat.  Shoppers Drugmart announced a new 5 year issue at around +167 bps over the Canadas.  This is a little wider than where straight bank bonds trade in that area.  We don't see a whole lot of value, but it's probably fairly priced, and non-financial issues tend to sell well in our thin corporate market.

Yesterday's New Home Sales came higher than expectations, gaining 3.3% over March sales.  We'll just add that it's easy to post percentage gains when the numbers get low enough....

US GDP is out tomorrow morning.  We won't be holding our breath to find out what happened two months ago though, but expect around 1% annualized.  Personal consumption and GDP Prices will be more interesting to see.

Durable Goods are out this morning in the US.  It's a volatile series, so we'll watch the trend, not the print which came in at -0.5%, 2.5% ex-transports.  This is a strong number and getting better over the past couple of months.

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