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Daily Market Commentary

The ECB left rates unchanged today at 4% despite cooling of their economy.  This was well anticipated as price increases keep stoking inflation fears.

In a largely similar release, the Bank of England is keeping rates unchanged at 5% in a largely similar release. 

Asian rates are on the rise.  Indonesia and Philippines both hiked rates today, as are many Asian economies as inflation heats up.  This becomes worrying to us, despite slowing economies in North America, as much of the disinflation we have enjoyed over the past 20 years has been courtesy of Asian countries exporting their disinflation to us through low manufacturing costs. 

We'll re-iterate once again that food and energy inflation in itself is not very worrying.  In the long run, those are DIS-inflationary phenomena, as consumers will shift spending to those goods from other more discretionary spending.  Wage inflation, however, worries us. 

Canada's building permits, after a big drop in March, came in with a huge bounce back to 14.5% on the month.

Jobless claims also dropped for the week.  This news as well as the overseas developments have bonds trading lower this morning.

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