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Daily Market Commentary

Given last Friday's horrible employment report, the importance of the weekly jobless claims numbers has risen substantially.  You might recall the Daily FI Snapshot from Aug 23 (call if you want a copy) we highlighted the bottoming pattern in the chart of continuing claims.  This is more worrying now that the big monthly employment number essentially crapped the bed on Friday (today's continuing claims chart reproduced in the Daily FI Snapshot).


  Canadian capacity utilization slipped slightly and last month was revised downward for the previous month.  Still however, our cap ute is very high - highlighting the relative strength of our market vs. the Americans.


  I guess I have to talk about the CAD$ hitting 30 year highs (or the US$ hitting lows).  Given expensive gold, oil, wheat, and beer, Canada deserves to have a rich currency.  Pretty soon the IHOP's south of the border will be frantically trying to find a substitute for Maple Syrup if this strength keeps up.  We are not materially stronger against other currencies over the past weeks, however.  The Euro, GBP, AUD and CHF have all kept up with our rise.



Bonds are largely unchanged.  The markets are trying to reconcile between sky high commodity prices and now an increasing proportion of US economic analysts calling for a recession.  Economists are split between a 25 bp and 50 bp cut from the Fed next week (we are looking for 25 - as we think the Fed will want to maintain order as they did on the way up), but the curve has priced in over 100 bps of cuts in the next year.


As this fear continues to rise, we will be trying to find value in oversold high quality (A and better rated) corporate bonds, which are being sold along with anything credit related.


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