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Daily Market Commentary

As we limp our way out of a long weekend to see what's transpired, we look to yesterday's US Leading indicators print, which came in just above expectations.  Bonds were little changed on the day.

With Bell Canada in the news once more (more on that in the Launchpad above), we will be watching the bonds closely.  It is too early to tell yet where they will resume trading, as the liquidity in this name has dried up at the best of times.  The details are light, but the rumours are confirming what we are seeing in the rest of the high yield market;  We continually read stories about the appetite for junk bonds declining as default rates climb.  Whether the banks want to renegotiate the terms or not, this deal could depend on the market's desire for bonds.  the financing banks just aren't in a position to take this debt on themselves to seal the deal.

PPI Inflation data is out this morning.  More on that later today and this week as Canadian CPI will also be reported.  As commodities refuse to give up their upwards march, we will be watching not only for pass-through to consumer prices, but also if it matters!  Having just driven several hundred kms this weekend, like half of Toronto, we have to imagine that more dollars going into our fuel tanks will cause cutbacks on spending elsewhere.

This weekend was not exactly the best example, as temperature barely made their way out of single digits, but I'm betting we will see a lot less gas guzzling boats out on the lake this summer.

Canada's manufacturing shipments also reported poorly this morning, dropping 1.6%.  This series is pretty volatile, so once again we watch trends and not prints, but last month was revised downwards as well.  With a CAD$ hovering around par, we can't say we're surprised.

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