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Market Commentary

 While Canada's Q4 GDP growth of 1.4% exceeded street estimates, it was the weakest quarter since 2003. Notably, Q3 GDP was revised upwards to 2% from 1.7%.Nothing in this news will affect the march 6 interest rate decision by the Bank of Canada. The Bank Rate will stay at 4.25%. There is little to discuss of note in today's bond market. The action in other markets this week has contributed to a flight to high quality bonds. Given the absence of AAA corporates, this has meant that government bonds have benefited and yield spreads have begun to widen between governments and junk bonds.


 The bond market is in bull phase now and we expect market yields to fall by 25 basis points or so in the medium term.


The new Shaw Communications bond issue continues to attract strong secondary market demand at a spread of 165 basis points over the Canada curve.


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