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Daily Market Commentary

TD bank came to market on Friday, issuing a straight 5 year discount note.  Imagine that, no floater, no step-ups, no sinking funds, just straight semi-annual debt.  The issue came at around an 18 bp concession to the market, priced at 140 bps over the Canada bonds.


Financial companies debt continues to be cheap compared to non-financial.  We will re-iterate our position that non financial debt in companies that are not going to need major new financing in the short term are looking attractive.  Terasen, for example, came to market with a 30 year issue on Thursday priced at +183 over the Canadas.  Considering its inferior credit rating to TD bank, the extra 43 basis points for an addition 25 years seems paltry.  Continue to look for these more stable issues.  Another issue we like in these circumstances is the Molson Coors 5% 9/22/15, currently yielding around 5.18%



  The data is light at the start of the week, with nothing to look at until Wednesday's retail sales numbers.  Australia surprised the market somewhat as the RBA announced that further rate hikes will be on the way to cool the inflationary pressures they continue to feel down under.


The A$ is off to the races on this news, and the stocks are sagging.  The overnight rate in Aus is already 7%, and the yield curve is firmly inverted.


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