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Market Update

Though stock index futures point to a higher opening amid speculation that JP Morgan may up it's takeover offer for Bear Stearns, last week's instability in the financial markets lit a bid for safe haven government debt.  With the FOMC slashing their overnight target by another 75bps (and a full 3 percentage points since September) to 2.25%, two-year US Treasury bonds are yielding a mere 1.69% --- levels not seen since mid-2003.  Bernanke and Co. meet again on April 30, and Fed Fund futures have already predicted a 75% likelihood of cutting by at least another 25 bps.  Whether or not this will help ease an already weak US economy remains to be seen, as some have suggested that the only remaining solution the FED has is to accept mortgage-backed debt as collateral for loans to ease liquidity fears.  With an already weak job market, lower home values and higher fuel costs, their next step will be of paramount importance.

 

Closer to home, the big news has been the slide of our loonie.  Flirting with the 90 cent level just only several months ago, the CAD has touched it's lowest level for 2008 at 1.0275 (with technical indicators pointing to a further slide).  Much of this can be attributed to concerns that a slumping US economy will curb global demand for commodities. 

 

It'll be a light news week in Canada, but watch out for US GDP numbers on Thursday. 

 

 



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