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Daily Market Commentary

Piles of data this morning led by CPI has given us some hay to chew on in the bond and FX markets.  CPI came in slightly light on the core, but more or less as expected.  Housing kept the headline higher than the core at this point, both of which came in slightly lighter than last month.  The trend in reported inflation numbers right now is certainly down.  They are certainly following the weaker GDP growth we are witnessing, and we haven't been hearing any of the stagflation chatter lately.


Canadas manufacturing shipments were very strong this morning, helping our bonds underperform treasuries (and helping our dollar higher), and car sales flattened out from February's sharp drop.


  Bonds initially shot higher on the print, but traders have since sold, and the bonds are now holding onto modest gains.  Late yesterday, we saw an unprovoked selloff on bonds, especially in Canada, as the market lined itself up for today's releases.  Those higher yields are holding this morning.


The CAD$ is unbelievably strong, the rally correction we'd been calling for to 1.1200 happened (to within 20 pps), but only for about two hours on Thursday.  Otherwise, it has remained unbelievably strong.  It is stronger against virtually every currency (currently trading into 1.0990 territory), as the US$ is weaker against all, with the exception of Stirling.


  The week is young, lots of data to come including TIC numbers (foreign purchases of US securities) and housing data.  Hopefully, this will introduce some more volatility into our flat lining bond market.



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