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Daily Market Commentary

Canada's day off has led into today's rally, as yesterday the treasuries rallied testing (and breaking) the 5% barrier on the treasury notes.  While not a technical resistance, 5% has established itself as a breakpoint in both directions as a psychological barrier.

 

This morning, treasuries are slightly weaker on some profit taking as traders are establishing their positions early ahead of the US market closures.  The US yield curve is steepening a little also - heading further into the normal status (save the fed funds rate).

 

 

The credit side of the equation is a little more active, as the done deal for BCE (to be taken private) is a losing bet on the bond side.  The initial reaction has taken the 10 year BCE bonds out 40 bps, but the market has yet to absorb the full impact.  Interestingly, the Teachers consortium bid is calling for about $17 billion in debt and preferreds in the new structure, which is approximately what they have outstanding now.  Despite the lack of additional debt being piled onto the company, the bond traders don't like the deal at all.  DS and Scotia have stopped trading their paper principal all together, which could have impacts on the liquidity of the issues and will further constrict holders.  More info will be passed along as it becomes available.

 

 

Reminder that the US$ bond markets will be closing today at 1pm, and re-opening July 5th.

 



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