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Daily Market Commentary

Loonies staged an impressive rally yesterday, gaining a penny and a half against the greenbacks, and outpacing the Euro by an even wider margin.  The persistent strength in Oil and especially Nat Gas prices (up 38% in 2008 alone), in addition to persistently strong economic data like yesterday's Ivey Purchasing Manager's Index @ 57.6 (similar to the US ISM survey), have given good reason for the CAD$ rally.

  In the longer term, we would expect the Canadian dollar to perform in a similar fashion to the greenback (when measured abroad).  As by far our largest trading partner, our economic fate is still very much tied to their engine.

 Bonds yesterday suffered an mid day breakdown as the equity rally continued.  We noticed a definite sentiment shift in the government bond market.  Buying recently has generally been met with a wall of offers, and yields are grinding higher.  For those interested in playing the short side of the Canadian bond market, your options are to short cash bonds or buy the Horizon BetaPro Canadian Bond Bear Plus mutual fund

 We are starting the day mostly unchanged as US productivity was strong and Unit Labor costs remained lower than expectations.  Interesting to note that REAL hourly earnings are actually negative (Those are changes in hourly wages adjusted by inflation). 



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