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Daily Market Commentary

 It's a quiet start to the day here, following a quiet day yesterday as well.

New home sales somehow managed to print an increase of 4.8% month over month yesterday.  This is because last month's number of 793,000 (which was a disappointment to the market) was revised downward to 735,000 as people cancelled their orders.  That made this month's print of 770,000 an increase over last month instead of a decrease.  Seems pretty thin, but the market did not seem worried about it.  Either way, the chart doesn't lie (see Daily FI Snapshot), and the downtrend in new home sales is FAR from broken.  Follow the charts in the US home lenders like Countrywide and Washington Mutual and you'll see much of the same pattern.  You could argue that there isn't much downside left, but housing inventories are still extremely high, and these markets aren't very liquid.  It takes a long time to buy and sell a house, expect this market to languish for some time yet.

  The Loonie is the superstar, once again.  Only AUS$ are stronger on bets they will hike rates again to 6.50%.  We're hovering just south of a 1.04 handle as oil surged overnight to almost $92.00.  Throw in weak greenbacks against every currency that matters (except the Yen) and you've got a recipe for further C$ gains.  With the Canabuck rising like a hot air balloon and the US housing market dropping like lead one, it's got me thinking when I should start looking south.  The trade may be coming to "SELL Muskoka/Whistler/Banff/Tremblant - BUY South Beach/Sedona/Myrtle"

Bonds are largely unchanged this morning, with Canada slightly outperforming the US.  The spread on US to Canada 10 years is still 11 bps.  This is narrowing, but expect it to narrow more as the US rates continue through ours, starting with next week the Fed will cut to match their overnight rate to ours.

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