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Daily Market Commentary

Fasten your seatbelts because today will be quite the ride!  Bonds are advancing this morning due to reports that corporate credit default swaps widened overnight, prompting investors to seek safer haven government securities.  This flight to quality rally, compounded with a very soft durable goods number in the US, has 10 year Treasury's trading at 4.81% (a level not seen since mid-May).   With core durable goods numbers coming in so weak, many are speculating whether the Fed may speed up their next rate cut announcement.  These rumblings are in stark contrast to just a few weeks ago, when Philly Fed numbers predicted a stronger economy leading into 2008.




The song is still the same in Canada, with our market piggybacking the rally from our neighbours to the south.  BAX futures are still guaranteeing a rate hike in September, with another one very likely by year's end.  Ten year interest rate spreads continue to narrow against the US, tightening to 30 bps this morning.  The CAD$, after reaching 30 year highs earlier this week, may test the 1.0500 level today.



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