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Daily Market Commentary

Early reaction to GM earnings in the bond world have not seen spreads move --- yet.  All issues continue to remain no bid.  We will be keeping a close watch on GMAC bonds for any further developments this morning.  It is already being reported that credit default swaps on GM have risen by 3% overnight.  

A plethora of economic releases in the US this morning is headlined by nonfarm payrolls falling for a seventh consecutive period.  Although losing only 51K (less than the forecast of 75K), the unemployment rate rose to 5.7%.  Coming off the back of very poor jobless claims yesterday, these employment figures are further reinforcing recession concerns.  The continuing trend of weak labour markets is keeping the Fed uncomfortably on hold, as policymakers are forced to balance the coexistence of recessionay and inflationary risks.  Even ex-Fed Chairman Alan Greenspan has remarked that there is a 50% likelihood that the US economy will fall into a recession, as stricter lending rules will keep housing prices sliding.  Bonds are naturally selling off in reaction to these releases.  

A bit quieter north of the border this morning with no releases ahead of the long weekend.  The big news out late yesterday from our friends in Ottawa, was that CMHC was expanding their program to include a CMB issue with a 10 year maturity to attract a broader pool of investors.  Initial reaction to spreads was muted.  The CAD$ is also little changed from yesterday, holding in at 1.0285



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