North American markets are powering forward this morning after US employment data was better than expected, sending the TSX index to its highest level since early January. A close this afternoon at the indexes current level would be a new high for this bull market. Payrolls in the US declined by 36,000 in February, roughly half of average estimates, while the unemployment figure remained unchanged at 9.7%. Analysts had expected that major storms last month would have more of a negative effect on employment. Canada’s finance minister yesterday tabled his budget with no new fiscal stimulus measures and a five year plan to balance the budget. The plan is aggressive but credible, and would make Canada the first of the G-7 countries to eliminate its deficit. The TSX is up 131 pts. The Dow is up 84 pts.

The Canadian dollar was unchanged after the budget release, but is rising on the back of the employment data this morning. The Loonie is up a quarter-cent to US$.9729. Bond yields continue to climb this morning with the 5-year Canada yield up to 2.77% and the 10-year to 3.47%. The 5-year yield is now at its high for the year, which may well put some upward pressure on mortgage rates. Gold is up $4.40 to US$1138/oz. Oil is up $1.36 to US$81.57/barrel.

Markets are relatively quiet this morning without any major data to push things in either direction. Jobless claims in the US fell by 29,000 last week, in line with expectations, while productivity in the US in the fourth quarter surged at a 6.9% annual rate as companies continued to cut payrolls as demand stabilized. With companies operating at bare minimum of employees, any increase in output will likely be matched with an increase in hiring over the coming months. TD bank reported profits that doubled from a year ago, pushing the shares to within pennies of a new 52-week high. Greece announced the sale of some

€3-5 billion in ten year bonds, which was oversubscribed by about three times the size of the issue, a positive sign as they try to get their finances in order. The TSX is down 33 pts. The Dow is up 11 pts.

The Loonie has been trading around the break-even point this morning, currently 4 bps higher at US$.9695. The five-year Canada bond yield continues to rise, hitting 2.71% this morning for the first time since mid-January, while the 10-year is unchanged at 3.41%. Gold is down $14 to US$1129.30/oz. Oil is down 92 cents to US$79.95/barrel.

North American markets are broadly stronger this morning, led by the banks here in Canada. Overnight, India announced significant increases in manufacturing and exports which caused emerging markets shares to rise, while Greek debt is rebounding on speculation that the country will announce additional deficit cuts that may open the door for an aid package by the European Union. The Bank of Canada left interest rates unchanged this morning, but signalled that inflation and economic output have been higher than expected, raising expectations for a rate hike early in the second half of the year. The Australian central bank hiked rates by another quarter point overnight. Bank of Montreal followed in the footsteps of National and CIBC with strong first quarter numbers, beating average estimates by 10%. The TSX is up 88 pts. The Dow is up 41 pts.

The Canadian dollar climbed three-quarters of a penny to US$.9678 on the “less-dovish” comments by the Bank of Canada. Bond yields climbed to 2.55% for the 5-year Canada and 3.41% for the ten. Oil is up $1.25 to US$79.95/barrel. Gold is up $16 to US$1134.40/oz.

North American markets are broadly stronger this morning, led by the banks here in Canada. Overnight, India announced significant increases in manufacturing and exports which caused emerging markets shares to rise, while Greek debt is rebounding on speculation that the country will announce additional deficit cuts that may open the door for an aid package by the European Union. The Bank of Canada left interest rates unchanged this morning, but signalled that inflation and economic output have been higher than expected, raising expectations for a rate hike early in the second half of the year. The Australian central bank hiked rates by another quarter point overnight. Bank of Montreal followed in the footsteps of National and CIBC with strong first quarter numbers, beating average estimates by 10%. The TSX is up 88 pts. The Dow is up 41 pts.

The Canadian dollar climbed three-quarters of a penny to US$.9678 on the “less-dovish” comments by the Bank of Canada. Bond yields climbed to 2.55% for the 5-year Canada and 3.41% for the ten. Oil is up $1.25 to US$79.95/barrel. Gold is up $16 to US$1134.40/oz.

The TSX is climbing again this morning after finishing February with the strongest performance of the twenty largest indexes by market-cap in the world. Strong economic data is fuelling matters this morning, as the US ISM-manufacturing index expanded for the seventh consecutive month and personal spending climbed for the fourth month in a row. The employment component of the ISM index was encouraging with its fastest growth in five years.

Canada's Gross Domestic Production grew at a 5% annualized pace in the fourth quarter, outpacing expectations by a wide margin. No change in interest rates is expected when the Bank of Canada convenes tomorrow, although the data will add to pressure. Copper jumped the most in almost a year on supply concerns after the massive earthquake in Chile. The TSX is up 70 pts. The Dow is up 69 pts.

Bond yields climbed on the economic data, pushing the 5-year yield up to 2.49% and the 10-year to 3.42%. The Loonie is also benefiting with a half cent gain to US$.9556. Gold is down $3.40 to US$1115.50/oz. Oil is flat at US$79.67/barrel.

US markets dropped at the open, erasing yesterday’s gains after economic data surprised on the downside and rating agency Moody’s suggested it may cut Greece’s sovereign debt rating. The TSX is in positive territory on the back of the banks after CIBC and National Bank reported better than expected first-quarter income. Initial jobless claims in the US climbed by 22,000 last week, while orders for durable goods (excluding aircraft) unexpectedly slipped. TSX is up 12 pts.

The Dow is down 168 pts.

The Loonie fell more than a full penny this morning as debt concerns causes money to flow into US dollars. The C$ is down $1.11 to US$.9377. Bonds continue to climb on the economic data and after yesterday’s comments from Bernanke, pushing the 5-year Canada yield down to 2.50% and the 10-year to 3.41%. Oil is down $2.70 to US$77.30/barrel. Gold is up $2 to US$1099.20/oz.

Just in cased you missed it, in addition to an amazing Olympic medals result for our country, yesterday, Team Canada managed to crush the Russian squad 7-3 last night, and as someone pointed out: 87 (Crosby) minus 8 (Ovechkin) = 79 (the atomic number for gold). Coincidence? :-)

Have a great day...and... “Go Canada Go!”

North American markets are climbing this morning after Fed Chairman Ben Bernanke testified before congress that the recent hike in the discount rate is merely the first step in the removal of emergency liquidity measures and does not foreshadow an imminent rate hike. He reiterated his pledge to keep interest rates low for an extended period. New home sales in the US fell in January to the lowest level on record as the foreclosure market saps demand for new construction. The Canadian banks begin their Q1 earnings season with CIBC and National kicking things off tomorrow. They have been a driving force in the markets over the last two weeks, pushing the index higher in anticipation of decent results. The TSX is up 26 pts. The Dow is up 87 pts.

The Canadian dollar is clawing back some of yesterday’s steep slide, rising a third of a cent to US$.9493 this morning. Bonds are slightly stronger after Bernanke’s speech with the 5-year Canada yielding 2.52% and the 10-year 3.43%. Gold is down $3.90 to US$1099.30/oz. Oil is up 91 cents to US$79.77/barrel.

North American markets declined shortly after the open this morning as an index of US consumer confidence unexpectedly weakened, suggesting spending will likely constrained. An index of US home prices advanced for the seventh consecutive month in December, and showed the smallest year-over-year decline since May 2007. The market is awaiting Ben Bernanke’s appearance before congress tomorrow for an indication of when interest rates may begin to rise after last weeks hike in the discount rate. Home Depot followed in competitor Lowe’s footsteps with better than expected profits, and raised its dividend for the first time since 2006. Over 75% of the four hundred S&P500 listed companies that have reported last quarter’s profits have exceeded average forecasts. The TSX is down 120 pts. The Dow is down 71 pts.

The Canadian dollar is taking one on the chin as the sluggish consumer confidence report causes a rush into greenbacks. The Loonie is down 75 bps to US$.9516. Bond yields declined to 2.53% for the 5-year Canada and 3.45% for the ten. Gold is down $8 to US$1105.10/oz. Oil is down $1.37 to US$78.93/barrel.

After markets closed last night, the Federal Reserve acted on last week’s promise to raise the discount rate “before long”. The discount rate is the rate the Fed charges banks for emergency borrowing, and raising it from 0.50% to 0.75% is their first measure in reducing banks’ dependence on their lending facilities now that the financial crisis is behind us. Most banks don’t use the facility at this point, preferring to borrow through the Term Auction Facility (TAF). This rate has also been increased, and the facility should be coming to an end next month. Markets reacted negatively overnight, but are strengthening at the moment as this is a clear sign that the Fed believes credit markets and the economy are on firm enough ground to start removing excess liquidity. A couple of Canadian economic reports this morning would bolster their belief, with retail sales rising and continuing unemployment benefits declining. The TSX is up 29 pts. The Dow is up 22 pts.

The Canadian dollar fell overnight, but has rallied since to within a quarter-cent of last nights close to US$.9576. Bond yields climbed on the news, pushing the 5-year Canada yield up to 2.61% and the 10-year to 3.53%. Gold is off 60 cents to US$1118.10/oz. Oil is up 50 cents to US$79.55/barrel.

North American markets declined shortly after the open as data on new home sales in the US was lower than expected, and ahead of the Fed’s policy announcement due later this morning. No move in interest rates is expected, and considering the Senate is set to vote tomorrow to decide whether or not Bernanke receives a second term as Fed Chair, it’s unlikely that anything in the announcement will even slightly rock the boat. President Obama will deliver his State of the Union Address at 6pm this evening. Profit reports have been largely positive with companies such as Johnson & Johnson, United Technologies and Caterpillar delivering higher than expected numbers, although the revenue rebound remains sluggish. The TSX is down 36 pts. The Dow is down 29 pts.

The Canadian dollar is down 35 bps to US$.9379 as the rush into US dollars continues. The yield on the one-month US T-Bill is actually negative this morning due to the surge in demand and reduced supply as the Treasury Dept. tries to force money into longer dated issues. Bond yields have come off in Canada to 2.39% for the 5-year bond and 3.30% for the ten. Gold is down $5.30 to US$1093/oz. Oil is flat at US$74.77/barrel.
Have a great day!

The wave of selling the last two days appears to be abating this morning, although the major US banks remain weak as President Obama tries to salvage his sagging popularity by tapping into voter anger through curbing profits at financial institutions. The proposed changes would prohibit US banks from owning or making investments in private equity and hedge funds, which is not just a profit centre, but a necessary source of capital to businesses. Earnings at Google topped estimates last night, while General Electric managed to beat forecasts this morning. Although still early, so far the Q4 earnings season has been solid, even amid rather lofty growth expectations. The TSX is up 11 pts. The Dow is down 24 pts.

The Canadian dollar continues to weaken as the uncertainty around Obama’s plans and monetary tightening in China causes capital to flow into the relative safety of greenbacks. The Loonie is down a third of a cent this morning to US$.9478. Bond yields are also lower with the 5-year Canada at 2.48% and the 10-year at 3.39%. Gold is down $6.80 to US$1096.30/oz. Oil is down 71 cents to US$75.37/barrel.

Markets rallied throughout the balance of yesterday’s trading, but are selling off again this morning due to the strong economic figures from China. The Chinese economy expanded at a 10.7% clip in the fourth quarter, beating average estimates and pulling the full year figure solidly above the administrations own targets. This has traders worried about further monetary tightening and its effect on demand for raw materials, which is weighing heavily on commodity related sectors this morning. Earnings reports were largely positive, with EBay, Starbucks and Xerox beating average estimates. The index of US leading economic indicators also increased more than expected in December, suggesting the US economy will keep growing at least through the first half of this year. Unemployment claims climbed last week which likely reflected a backlog from the holiday season. The TSX is down 135 pts. The Dow is down 165 pts.

The Loonie is under pressure as the greenback rallies, down a quarter cent to US$.9525 this morning. Bond yields are relatively steady with the 5-year Canada yielding 2.52% and the 10-year 3.40%. Oil is off $1.35 to US$76.40/barrel. Gold is down $20.50 to US$1092/oz.

Have a great day.

Bank of Canada stands pat at 0.25%

Last Updated: Tuesday, January 19, 2010 | 9:41 AM ET

CBC News <http://www.cbc.ca/news/credit.html> 

Governor of the Bank of Canada Mark Carney held the bank's benchmark lending rate steady at 0.25 per cent on Tuesday. (Richard Lam/Canadian Press)

The Bank of Canada kept its benchmark lending rate at 0.25 per cent Tuesday, reiterating its conditional commitment to hold rates steady until the middle of 2010.

Although it held the overnight lending rate steady, the bank did acknowledge that the recovery appears to be proceeding at a better pace than it was anticipating.

"While the outlook for global growth through 2010 and 2011 is somewhat stronger than the bank had projected in its October monetary policy report, the recovery continues to depend on exceptional monetary and fiscal stimulus, as well as extraordinary measures taken to support financial systems," the bank said in announcing the rate decision.

The Canadian economy grew by a tepid 0.1 per cent in the third quarter, Statistics Canada reported last month. But that "is expected to have picked up further in the fourth quarter," the bank said.

The Bank projects that the economy will grow by 2.9 per cent in 2010 and 3.5 per cent in 2011, after contracting by 2.5 per cent in 2009.

In its statement, the bank repeated its mild concern over the risk that the elevated Canadian dollar presents to the recovery.

"The persistent strength of the Canadian dollar … continues to act as a significant drag on economic activity in Canada," the bank said.

The bank is set to release its next decision on interest rates on March 2.

US markets are closed this morning for the Martin Luther King Jr. holiday, leaving the wires devoid of any major news items. That’s going to change as the week progresses with earnings season getting into full swing. Major financial firms such as Citigroup, Morgan Stanley, Bank of America, Wells Fargo and Goldman Sachs are due to report this week, as are tech heavyweights IBM and Google. Bank of Canada governor Mark Carney will almost assuredly keep rates on hold at his policy announcement tomorrow. Strength in financials has led the TSX to a 49 pt gain this morning.

The Canadian dollar is stronger, up 34 bps to US$.9748. Bonds are steady with the 5-year Canada yielding 2.63% and the 10-year 3.49%. Gold is up $3 to US$1133.50/oz. Oil is up 40 cents to US$78.40/barrel.

Markets opened lower this morning amid mixed profit reports and increasing concern over Greece’s debt problems. JP Morgan profit quadrupled on higher investment-banking revenue, however missed revenue estimates due to a loss at it’s retail banking division. European Central Bank president Trichet commented that Europe is facing major debt problem, but that no single nation would receive any special treatment. This has led to renewed concerns over Greece’s debt as the country attempts to restructure its finances. Both the Dow and TSX are down 108 pts.

The Loonie is paring recent gains as risk is taken off the table and ploughed into greenbacks. The C$ is off 44 bps to US$.9727 this morning. Bond yields are also lower, with the 5-year Canada down to 2.62% and the 10-year to 3.50%. Gold is down $11.90 to US$1131.10/oz. Oil is off 83 cents to US$78.55/barrel.

North American markets opened higher this morning, but have steadily been running out of steam since the bell. Retail sales in the US declined in December when the market was expecting a slight gain. US initial jobless claims rose slightly last week, as expected, while the four week average declined to the lowest level since August 2008. Technology shares are quite strong this morning after business-management software manufacturer SAP said sales and margins beat estimates. Microsoft and Oracle are rising in sympathy, while Intel is up ahead of their quarterly results due after the close. The TSX is down 64 pts. The Dow is up just 8 pts.

The Canadian dollar is on an absolute tear, up another 35 bps this morning to US$.9738. Part of the reason is that commodity currencies are rising in tandem with the Aussie dollar, after a report showed employment in the country climbed by 35,000 last month, raising the likelihood of another interest rate hike by the RBA next month. Bond yields climbed across the curve for the same reason, with the 5-year Canada yielding 2.71% and the 10-year 3.58%. Gold is down $3.70 to US$1133.10/oz. Oil is down 43 cents to US$79.22/barrel.

Mixed markets this morning as concerns over Chinese monetary policy still weigh on the commodity-heavy TSX, while US stocks are being buoyed by positive comments from Kraft. The company raised it’s full year guidance, and suggested it will expand with or without its proposed hostile takeover of Cadbury. Shares of Google are weaker after the search engine ended its self-censorship in China, and said it may pull it’s service from the country altogether after allegations of attacks on Gmail accounts of human rights activists. Shares of Chinese rival Baidu.com, the market leader and only other competitor in China, jumped 11% on Nasdaq this morning. The TSX is down 43 pts. The Dow is up 29 pts.

The Canadian dollar is unusually strong in the face of weak commodity prices, climbing a half-cent this morning to US$.9670. Bond yields are unchanged with the 5-year Canada yielding 2.68% and the 10-year 3.56%. Gold is down $5.40 to US$1124.80/oz. Oil is off $1.50 to US$79.31/barrel.

North American markets are taking a step back this morning after Alcoa missed estimates and China moved again to reign in economic stimulus. Alcoa reported higher than expected revenue in the fourth quarter of 2009, however still posted a slight loss when the market was expecting a return to profitability. After raising their 3-month interest rate last week, China moved again by raising reserve requirements for banks as they try to stem the tide of borrowing. This is weighing heavily on commodity prices this morning. Canada posted an unexpected trade deficit in November as imports rose faster than exports, highlighting the effects of a strong Loonie. The TSX is down 66 pts. The Dow is down 34 pts.

The Canadian dollar declined after the trade data was released, however is on the rise again to just a 25 bps loss on the day at US$.9651. Bond yields declined on the news, with the 5-year Canada yield down to 2.67% and the 10-year to 3.56%. Oil is off $1.06 to US$81.46/barrel. Gold is down $3 to US$1148.40/oz.

North American markets rallied out of the gate this morning, pushing the TSX over the 12,000 mark for the first time September 2008, but have settled back as inevitable profit taking takes centre stage after a week-long run-up. News that Chinese imports climbed to an all-time high in December stoked the already red hot fire under commodities, lifting shares such as Agrium and Teck Resources to new 52-week highs. Canadian housing starts rose in December for the third consecutive month, which should provide a boost to Q4 GDP numbers. Alcoa kicks off earnings season after the bell today with majors such as Intel and JP Morgan also on tap this week. Analysts are expecting a sharp increase in fourth quarter profits. The TSX is up 13 pts. The Dow is down 5 pts.

The Canadian dollar is off slightly to US$.9687 even as most commodity prices jump. Bond yields declined a touch to 2.69% for the 5-year Canada and 3.60% for the ten. Oil rose to a 15-month high this morning, but has settled back to US$82.39/barrel. Gold is up $15.40 to US$1154.30/oz.

Have a great day.

It’s a mixed bag out there this morning with no sector providing any clear direction. The much anticipated employment report was a bit of a disappointment as the US economy shed 85,000 jobs last month, although the November figure was revised to a slight gain, the first in two years. Canada also disappointed with a loss of 2,600 positions, although this is just a fraction of the 79,000 jobs gained in the prior month. The rails are strong this morning after an analyst upgrade at UBS. US indexes are slightly lower with the S&P500 poised to end its four day winning streak (that would be every day this year). The Dow is off 24 pts. The TSX is up 22 pts and has climbed 1.5% in the first week of 2010.

The Loonie is flat this morning at US$.9655. The five year Canada bond yield declined 3 bps to 2.72% while the ten year is unchanged at 3.62%. Gold is off $6 to US$1127.70/oz. Oil is down 33 cents to US$82.33/barrel.

Most equity markets fell overnight after the Chinese central bank raised the interest rate on its benchmark 3-month bill as it tries to reign in lending and control inflation. Commodities declined on the news due to prospects for lower demand, although tighter policy in China would only occur if the authorities believed their annual economic growth targets would remain achievable. Initial jobless claims in the US were basically flat from last week, and slightly lower than forecast. The Labour Dept. is expected to release December’s monthly data tomorrow, with pundits starting to forecast that we could see a net increase in employment for the first time in two years. The TSX is down 78 pts. The Dow is up 4 pts.

The Loonie remains relatively strong despite the near universal weakness in commodities this morning, down just 20 bps to US$.9665. Bonds are unchanged with the 5-year Canada yielding 2.75% and the 10-year 3.62%. Oil appears set to snap a 10-day winning streak on the news from China and an unexpected build in US crude supplies, although crude is trading down just 26 cents to US$82.92/barrel. Gold is down $6 to US$1130.40/oz.

After closing at a new 52 week high yesterday, the TSX index continues to forge ahead this morning amid near universal strength in the mining sector. Gold has found some solid footing after a steep drop to finish ’09, while metals such as copper and zinc have advanced to new multi-month highs. The ISM Services Index poked its head just barely above 50 in December, being the dividing line between expansion and contraction, while the ADP employment report showed the smallest decline of positions in the US in almost two years. Blackberry Maker RIM has lost a bit of ground this morning after Google introduced a new smart phone. The TSX is up 44 pts. The Dow is up 17 pts.

The Canadian dollar is also strong as commodities rise, up over half a cent this morning to US$.9680. Bond yields ticked higher on the US data, with the 5-year Canada yield up to 2.76% and the 10-year to 3.62%. Oil is up $1.20 to US$82.97, marking its highest intra-day level in almost 15 months. Gold is up $18 to US$1136.70/oz.

It’s a relatively quiet day so far after yesterday’s impressive kick start to the year. US indexes declined at the open after pending home sales dropped more than forecast on a subsiding of the tax-credit induced surge, but markets then rallied after the Commerce Dep’t reported orders placed with US factories climbed about twice as fast as forecast. Both releases tallied November data, making them a bit dated. Canadian banks declined on the housing data, but the TSX index is being buoyed by the mining sector, specifically Potash which was upgraded by an analyst at Credit Suisse this morning. A scheduled earnings announcement from Mosaic after the close is also helping matters. The TSX is up 30 pts. The Dow is off 30 pts.

The Canadian dollar continues to strengthen, up a third of a cent this morning to US$.9635. Bond yields sank on the home-sales release, sending the 5-year Canada yield down to 2.72% and the 10-year to 3.57%. Oil is flat at US$81.52/barrel. Gold is up $6.20 to US$1124.50/oz.