Financial Update - September 17, 2012

North American markets are taking a breath this morning after last week’s Fed induced frenzy. Just in case you missed it, the Federal Reserve announced a third round of quantitative easing by pledging to buy some $40 billion of mortgage backed securities per month in the open market. They left the policy open- ended, meaning they will continue to ease as long as they see fit, while also extending their expectations of keeping interest rates low until 2015. This sent equities soaring, pushing the S&P500 to its highest level since December 2007 (actually an all time high if dividend reinvestment is included). The breadth of the advance was remarkable with volumes surging and the number of stocks making new 52-week highs jumping to its strongest level since late 2010. There is some question as to whether the move will do anything stimulate the US economy, but there is no question the action is inflationary. This week should be relatively quiet compared to last week’s fireworks with little economic or profit data on tap. Rona shares declined after Lowe’s withdrew its unsolicited offer to purchase the company. Apple shares are a few pennies shy of breaching $700 after first day pre-orders of its new gadget were double the numbers of its last phone. The TSX is down 13 pts. The Dow is down 18 pts.

The Canadian dollar has slipped a little after peaking Thursday, off 9 bps this morning to US$1.0288. Bond yields are also retreating with the 5-year Canada yielding 1.47% and the 10-year 1.95%. Oil is up 30 cents to US$99.30/barrel. Gold is flat at US$1773/oz.

Have a great day.

Financial Update - September 13, 2012

It’s pretty quiet out there this morning as market participants await the Fed’s policy announcement due today. Expectations for a third round of quantitative easing are running high. Jobless claims in the US climbed by 15,000 last week, which was slightly more than forecast. WTI crude oil touched a four month high this morning as concerns over supply disruptions flare in the wake of violent anti-US demonstrations over an amateur movie. Shares of Chevron just hit an all-time high. Apple shares are higher after unveiling its latest iPhone yesterday, which is expected to become the best selling gadget of all-time. The TSX is flat. The Dow is up 28 pts.

The Canadian dollar is up 17 bps to US$1.0257. Bond yields are lower ahead of the Fed announcement with the 5-year Canada yielding 1.41% and the 10-year 1.87%. Gold is up $2 to US$1736/oz. Oil is up a buck to US$98.00/barrel.

Have a great day.

Financial Update - September 11, 2012

The TSX failed to retain yesterday’s early gains, thereby extending its streak of miserable Monday’s in the process. The trend over balance of the week has been much more positive for the last few months, and that trend continues this morning with the major North American benchmarks in positive territory. The Dow just touched a figure not seen since December 2007. There is very little hard data out there this morning so the focus remains the FOMC’s rate decision due Thursday. Short term interest rates in countries such as Spain and Italy continue to slide after last week’s ECB announcement, which has significantly reduced the risk financial disruption in the region. The TSX is up 28 pts. The Dow is up 89 pts.

The Canadian dollar continues to climb along with risk appetite, up another 57 bps to US$1.0287. Bond yields are up a tick to 1.41% for the 5-year Canada and 1.86% for the ten. Oil is up 34 cents to US$96.88/barrel. Gold is up $4 to US$1736/oz.

Have a great day.

Financial Update - September 10, 2012

North American markets are slightly higher this morning, a nice surprise given that the TSX hasn’t experienced a Monday gain since mid-July. That said the overall trend over that period has been nothing but positive with our Canadian benchmark gaining ground in ten of the last fourteen weeks. There is little data on the wires this morning but the market will have its fair share of things to fret about as the week progresses. The German Constitutional Court will rule Wednesday on whether the country is legally able to fund the European Stability Mechanism, although is fully expected to give it the thumbs up. The Greek government will propose another round of contested budget cuts on Friday. Sandwiched in between will be the FOMC’s policy announcement Thursday with the Fed now clearly tilted toward more monetary easing. The TSX is up 15 pts. The Dow is up 16 pts.

The Canadian dollar is trading at a one year high, up a quarter-penny on the day to US$1.0249. Bond yields are flat at 1.42% for the 5-year Canada and 1.86% for the ten. Gold is $7 lower at US$1734/oz. Oil is unchanged at US$96.42/barrel.

Have a great day.

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Financial Update - September 06, 2012

The hills are alive with the sound of Outright Monetary Transactions this morning, the nickname applied to the ECB’s now-formally-announced plan to intervene in bond markets in an effort to stem the tide of rising yields in some of Europe’s over-indebted countries. The details were widely leaked over the last few days, with perhaps the only piece of the puzzle officially revealed this morning being no cap on the size of bond purchasing, essentially giving the ECB unlimited firepower. This has bond yields in countries like Spain and Italy plummeting, and stock markets soaring. The S&P500 just hit a fresh four-year high. Economic data out of the US is reinforcing the positive mood as the ISM services sector index expanded faster than forecast in August, while ADP estimated some 200,000 private sector jobs were added last month and unemployment claims dropped to a one month low. The TSX is up 131 pts. The Dow is up 237 pts.

The Loonie is in full flight along with most everything else, up almost a full penny to US$1.0182. Bond yields have jumped to 1.41% for the 5-year Canada and 1.83% for the ten. Oil is up $1.90 to US$97.26/barrel. Gold is up $15 to US$1709/oz.

Have a great day.

Financial Update - September 05, 2012

Yesterday morning’s sell-off didn’t last long as the major averages turned a corner around 9am and finished the day barely below water. Volume has been picking up from the anaemic levels of the last two weeks. There were more advancing issues than declining on the NYSE yesterday despite the small loss. The TSX index is moderately higher this morning with gold shares doing most of the heavy lifting as the metal approaches a five-month high. The ECB is set to announce a sovereign bond-buying program at their policy meeting tomorrow which has Italian and Spanish yields falling anew. The Bank of Canada kept its benchmark rate steady at 1% this morning and maintained its bias toward gradual removal of stimulus as it becomes necessary. The BoC is the only central bank among the G7 not currently leaning toward more monetary easing. The TSX is up 20 pts. The Dow is up 17 pts.

The Canadian dollar lost some of its steam after the rate announcement, falling 55 bps to US$1.0089. Bond yields are flat at 1.31% for the 5-year Canada and 1.74% for the ten. Oil is down 63 cents to US$94.67/barrel. Gold is unchanged at US$1696/oz.

Have a great day.