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Market Update

Canada's housing starts this morning surprised way on the upside, and August's number was revised upwards.  Combine this with the blowout jobs numbers out of Canada on Friday and you've got a recipe for a super strong economy.  Starts were strong across the country, not just in Alberta.  Same goes for Friday's payrolls numbers.  The surprise has been Ontario, apparently not as beleaguered  as the manufacturers would have you believe by the strong loonie.  Ontario was responsible for 60% of the new jobs created in September, and 30% of the housing starts.  The CAD$ is holding onto its gains from the end of last week, as it should.  These two numbers will have Dodge (and Carney) sitting on their hands for the time being, perhaps even looking at hikes should inflation numbers perk up at all.


  Once again we'll have to wait until Friday to get the good data this week, and our bond market is slightly underperforming.  All this good news out of Canada has us looking at the yield spread between US and Canada 10 years and wondering why the American bond is yielding more...  at 18 bps, this spread is sure to come back.  The only reason we see for Canada yields being lower is the government continually reducing the supply of tradable debt.  All these surpluses and slowly but surely removing liquidity from the Canadian market.


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