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Daily Market Commentary

Tone is generally negative this morning, and not helped in Canada by December's horrible GDP print.  This is ancient data, of course.  Some of this will actually have already been reported in company specific earnings releases and could possible be in history textbooks already, but a print of -0.7% is brutal for a monthly change.  We'd expect that Carney and company have already made their decision about tomorrow's Bank of Canada overnight rate decision, but if they haven't, this kind of release will certainly push them towards the 50 bps that half the street is calling for.



ISM manufacturing index will be out at 10am today.  We've wasted considerable ink talking about these business sentiment survey's recently, so we will be watching this closely.  Most of these indexes have plummeted either into recession territory or quickly towards it, and have historically been pretty good indicators of recessions, especially when mixed with employment numbers which we are watching closely.  They come out alter this week as well.  The data will be heavy this week, so expect lots of volatility as the markets digest the new numbers.



More steepening of the yield curve is upon us this morning.  The two years now yielding 2.73% while (This was 4.75% in June), while the 30 years are at 4.10%  (This was at 4.65% in June).  For those that decided 4.75% wasn't enough "yield" to purchases two years back then, the trade would have realized an annualized 12% return by now.  It just goes to show that a bond investment can't be measured by yield alone

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