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Daily Market Commentary

Shaw Communications was upgraded by DBRS to BBB (low).  Should S&P follow suit and upgrade, this bond will become fully investment grade.  We still expect more gains to be made in these bonds, as the 10 year Shaw, currently yielding 5.62%, should narrow in on other BBB credit (like YPG at 5.25% and Molson at 5%).  As S&P is the most followed of the credit agencies, we will be watching for their move.

 

  CPI out of the US today came in higher than expected and the bonds are getting sold heavily on the news.  We were trading higher before the print, and now are sharply lower.  Canada's retail sales were also VERY strong (remember this is a December number) compare to expectations and previous month.

 

Japan raised their overnight rate this morning, up to 0.50%, this is making the carry-traders nervous.  Although the unwinding of this carry trade could put some downward pressure on Treasuries, the Yen is actually weaker on the news as the BoJ indicated that their rates would increase very gradually.

 



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