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Daily Market Commentary

 Scotia's 3 year deal yesterday was very well received by the street.  What was originally planned as a $750 million deal turned into a $1.7 billion issue on huge demand.  It's no wonder - the market is still craving high quality issuers, short duration, discount to market levels and  with no strings attached.



Browsing through the recent step-up issues, we've noticed they are only issuing at about a 5-10 basis point discount to the market level of straight bonds.  This is hardly enough to be compensated for having zero capital upside on your holdings.  This is the main reason you haven't seen any step-up issues forwarded along from our desk.  If you can do as well with a buy and hold strategy on straight bonds - why have the structure?



Retail sales this morning came in above expectations, and ticked up from last month.  Gains of 0.3% in the headline and 0.3% in the ex-autos numbers are certainly a positive revelation for a battered consumer sector.  Perhaps people revived during the post-holiday shopping season.  Or maybe they just went out for dinner a lot.  Food and Services provided the bulk of the gains.  Losses in building materials, sporting goods, department stores, and don't forget gas.  Gasoline was a big contributor.  This wasn't a blow-out number, but a little relief nevertheless.  It will be interesting to see if these numbers have a sustained recover once congress throws stimulus towards the masses and saves those subprime borrowers (the legit ones, remember.... not the speculators) from losing their homes.



Treasury bonds are trading lower before and after the number, as equity futures jumped higher following the release of the retail numbers.


The Loonie is hovering around par right now.  Strong employment numbers last week on top of our safe secure fuel supply seems to be giving a bid to the CAD$.  It is higher against all the majors.



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