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Daily Market Commentary

The bond bulls are in effect this morning, with much of it attributed to Bank of America reporting poor Q3 earning's (see FAST comments above) due to substantial loan writedowns.  Poor numbers during the last week from large corporations are causing investors to scamper back to full "flight to quality" mode, especially in the short end.  At 3.88%, US 2 year Treasurys are now trading 35bps tighter from Friday's close.  Combine this with lower than expected housing starts, fewer building permits reported and evidence of benign inflation, it's nearly a foregone conclusion the Fed will cut the overnight rate to 4.5% on Halloween.  Boo! 




Though there were no surprises in core US CPI figures yesterday, housing starts were horrid.  Figures reported that builders broke ground at an annual rate of only 1.19 million homes in September; the lowest rate in 14 years.  Putting more salt into the wound, weekly US jobless numbers also came in higher than expected this morning at 337K.  Watch for the all important LEI number to hit the tape at 10AM to give further light on the economy in future months.




We got some unexpected news in Canada, as foreigners unexpectedly sold a net $3.83 billion of CDN securities in August.  This was off forecasted numbers of $2.25 billion in purchases.  But our loonie continues to chug along well, still at 0.975 after the number.



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