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Daily Market Commentary

We got a strong rally off of yesterday's Fed statement.  Was is hawkish?  Was it dovish?  Who knows - analysts were split on the subject.  While the hugely overanalyzed release was almost exactly the same as last meeting's, they removed a "downside risk" comment that had some confused. 

Most importantly, what did the market think?  Treasuries and Canada bonds got a strong bid, and interpreted the release as dovish.  Currency traders did the same, taking the screws to the greenback (and the C$ - when measured abroad).  Equity traders eventually jumped on board, although denied it for a bit at first, selling stocks into the close of the day as the Fed's worry about the economy changed into earnings worries.

This morning, there's a new stock of data to worry about.  The jobs data this morning was weak.  Challenger job cuts showed a 27% increase over last year (that's 27% more firings...), while initial and continuing jobless claims both ticked higher, continuing their bearish trend.  Bonds were giving up some of their gains this morning, but are coming back on this news.

There's plenty more data out at 10am when the important ISM survey gets released.

National Bank came to market with a fixed-floater.  $500 million with an initial maturity in 2013 and paying 5.55% (223 bps over Canadas), they have to option to extend it to 2018 and a rate of CDOR +264bps.  It has been interesting watching the terms change on these fixed floaters.  Although there still has not been an FF left to float after its initial maturity in Canada (they've all been called), the provision for those floaters have gotten wider and wider.  They used to come out at CDOR +100.  It's gotten to the point where you would actually want them to float!

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