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Daily Market Commentary

 Pre-Bank of Canada release we aren't seeing very much action.  It appears everyone has laid their bets and are waiting for the 9am release. 



Driving the US markets is the slew of earnings releases that are out this morning.  Even some consumer discretionary like Coach are topping estimates (albeit reduced estimates) and that is driving the bond market lower.  Those companies earning income from outside of North America are faring extremely well, lending credibility to the decoupling thesis.  Treasuries, being an international investment (although valued in greenbacks) are feeling the pinch after rallying to dizzying heights in recent weeks.  We continue to see Treasuries and to a lesser extent Canada bonds being weak in the near run, while selective dips into the credit world warrant a second look.



  Meanwhile, the pain in the financial sector continues as Royal Bank of Scotland plans to sell a whopping $24 billion in shares to boost capital after their debt write-downs.  This is significant dilution to the company which has a market cap of about $72 billion.  Essentially, it's the same old story - bad bets in the CDO/subprime sector, and overpaying for ABN Amro at exactly the wrong time are costing it big.



Housing data is also out this morning.  We're not expecting fireworks from this sector.  As we've mentioned many times before, the inventory overhang and the tightened lending standards across the US are going to hold this sector down for many quarters to come.



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