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Daily Market Commentary

There has been no dramatic rush to buy safe-haven Government bonds in the wake of yesterday's hiccup in equities. In fact, bond prices are slightly lower this morning.


There are no major economic items to change this; at 10:00 we will see home resales in the US and they are widely expected to have fallen for the 4th straight month, marking the worst setback since 2003. The Fed's Beige Book comes out at 2 and will be closely scrutinized as the Fed prepares for its August 7 meeting. At this stage, no change in the Fed Funds rate is in the cards and although the Fed believes inflation is moderating, it may be still too soon to contemplate easing.


 In Canada, the BAX market points to at least one more 25 basis point hike in the Bank Rate in Canada. Citibank has joined the now crowded bandwagon of fearless pundits predicting parity for the high flying Loonie.


 Interest rate spreads continue to narrow vis a vis the US with the two year spread at a slender 7 basis points and the ten year at minus 35.




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