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Daily Market Commentary

The data train continues this morning, after yesterday's active Fed day.

 

We got 50bps out of the Fed, and the typical reaction in equities was not mirrored in the bond side.  Treasuries ended the day lower despite the cutting from the Fed and their mention of downside risks to the economy.

 

 

  This morning's PCE remains sticky.  The Fed likes to watch this number as a gauge of inflation, and it hasn't dropped appreciably as we've entered this slowdown.  It has stopped rising, and I'd re-iterate that it WILL drop once the employment landscape deteriorates.  Speaking of employment, this week's jobless claims spiked higher.  This is seasonally normal, as firms generally wait until Christmas season is over before laying people off, however this pop up was much larger than expected.  Stay tuned for tomorrow's payrolls.  The market will be watching this closely.  As we've mentioned before, watch this closely...  it's the part of the economy that has been holding up and preventing all out disaster.

 

Bonds are moving higher on this news, as bets are laid on the table about how many more rate cuts are on the table.

 

 

 

In Canada GDP came in line with expectations at 0.1% growth for the month of November.  As we've mentioned before, once we get the monthly GDP report in Canada, it's ancient history and doesn't have much effect on the markets.

 

The loonie doesn't like the data announced this morning.  Fair enough reaction as it leans towards contraction and  less risk taking.  The relationship is holding true...  lower equity prices, lower CAD$.

 

 



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