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Daily Market Commentary

Jobs numbers in Canada might have you thinking we ARE somewhat insulated from the goings on south of the border.  Canada added 46,400 new jobs in January, a huge pop from December's loss.  December's number was also revised upwards from a loss of 19,000 to a loss of only 3,000.  The unemployment rate also slid to 5.8%...  could it be possible that our unemployment rate and the American's converge?


  Add to the fiery Canadian economy the housing starts for January coming in stronger than expected at a healthy 223,000 and the standard economic indicators seem rock solid here.


This news has lit up the loonie, which is trading a penny higher than its close.  The yield curve is also flattening on the news, with short bonds trading lower and longs higher.



The US Treasury market is stronger after yesterday HUGE selloff.  We normally don't like to tell you what's happened in the past, but in this case, the depth of the selloff was so big it deserves comment.  The treasury auction yesterday was the worst in several years, with very few indirect bidders and a HUGE tail.  The tail is the difference between the average and the highest yield of the auction - a large tail typically means lower demand.


Long bonds closed almost 3 point lower, having a 20 basis point move on the day.


  This morning, some of that is being made back, but this is the first sign we have seen of less treasury demand in some time.  Given that indirect bidders were so much lighter, we are wondering if that's a direct effect of sovereign wealth funds investing heavily into the equity offerings in the beleaguered financial sector...  less money to throw at US treasuries?



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