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Daily Market Commentary

Nothing is new in Bondland, although there are several earnings releases (mentioned by Scott above) that will potentially affect credit spreads.

Stories are circulating about increased corporate defaults, both Bloomberg and Moody's are reporting this morning.  Defaults in July rose to 2.5% on high-yield issues in the US.  Bloomberg's report references higher default rates in Europe as, you guessed it - the sub-prime crisis is being blamed in many companies' inability to refinance existing debt.

We'd suggest that this issue is WAY beyond sub-prime at this point.  That's like blaming the match for lighting the TNT.

Initial Jobless Claims was out this morning, rising again after last week's huge jump.  The trend continues to be worrying here.  Employment is weakening, but still is not horrible.  With an unemployment rate north of 5%, it is not high.... but it's rising.

rCanadian Building Permits for June were absolutely horrid, dropping 5.3% after May's gain of 1.1%.  We've been worried about the Canadian housing sector following the US lead lower, and it appears to be happening now.  Since we did not soar as high, and our lending practices were much more reasonable we most likely won't see the carnage here.  However, it will be hard to dodge the bullet completely.

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