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Daily Market Commentary

I certainly picked an interesting week to miss.  Luckily, Blackberry works almost everywhere in the world and all of last week's action didn't completely slip me by.


One thing that is interesting about missing several days in a row is stepping back and seeing the forest, rather than the trees.  What became obvious is that as the panic subsides, there are some real values in the market being revealed.  Government backed Canada mortgage bonds being at the top of the list, followed by provincial bonds.  Their relative yield to Canadas has rarely looked this attractive.  A CMB default is virtually impossible, as they are backed by the Feds, and we'd also say the same for provincials, although the possibility there is minutely higher.


  Another interesting thing to notice is how steep the yield curve had gotten (and still is).  Although there has been 40 basis points of flattening over the past week, the curve had gotten VERY steep in a very short period of time (see chart in FI Snapshot).  Without making any broad calls about the state of the market, nothing goes straight up or straight down.  Pauses and counter-trend rallies are always in order.



Canadian retail sales this morning improved slightly from December's numbers, and came in line with expectations.  The lag in these Canadian numbers (today's report reflect January's sales) is so great that they are almost useless.  It is notable that Canada still seems to be faring the slowdown better than the US.


Yesterday's existing Home Sales in the US also surprised to the high side.  Although this number doesn't actually reflect the prices paid for those homes, the fact that volume is returning is somewhat positive.



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