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Daily Market Commentary

Surprisingly, bonds are selling off of this morning's weaker than expected Import Price Index numbers.  Perhaps a "sell the news" situation, or just some profit taking from Monday's and Tuesday's gains.  While they were trading higher, they are now flat on the day.  The gains on the week have been on a flight to quality basis, residual effects of equity selloff happening instead of data driven.


The chances of a Fed rate hike (based on Fed Funds Futures) are virtually nil now, and we've now got almost three quarter point drops priced in within the next year (the 12 month contract is implying a 4.60% Fed Funds).  Watch for the short end of the curve to start dropping in yield.  The 6 month bills by far look like the cheapest part of the curve for conservative accounts.


CAD$ continues to drop as carry trades are unwound and the market forgets about commodities for the time being.


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