Jul. 3, 2009 (Action Economics) --
Action Alerts
Source: Bloomberg
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Canadian Market Outlook (July 3)
Yields hovered near multi-week lows, trading in a narrow range with U.S. markets closed for the Independence Day holiday. Anxiety about the strength of the global recovery persisted in the wake of the weak U.S. jobs data, pressuring crude oil and base metal markets to fresh losses. And the market absorbed news that the FDIC closed seven additional banks after the close on Thursday. More encouragingly, the pace of decline in Canadian auto sales moderated to -13.2% y/y in June.
The 10-year yield bounced 1 bp to 3.36%, consolidating above Thursday's four-week low at 3.34%. And the 2s10s spread widened 1.5 bps to +219 bps.
USD-CAD reovered above 1.1600 along with extended pressure on crude oil, although never testing Tuesday's peak at 1.1655. Notably, Finance Minister Flaherty supported the U.S. dollar's role as a global currency, noting it acted as a force for stability in the financial crisis.
The S&P/TSX Composite managed a modest bounce, up 20 points late in the session. Gains for the materials and financial services sector offset losses for the energy sector. Teck Resources was a key driver, with the market supporting its sale of a C$1.7 bln stake to CIC in order to pay down debt.
International securities transactions report for April: Canada's international securities figures revealed a $9.05 bln investment by non-residents into Canadian securities. Non-residents bought $5.8 bln in Canadian bonds, with much of the purchase ($6.7 bln) in provincial government bonds. The issuance of provincial government bonds in April jumped to levels not seen since the 1990s. Canadian equities were also at the top of shopping lists, as non-residents bought $3.3 bln worth of Canadian shares, the largest investment in over a year. Canadian investment abroad slowed to $1.3 bln from $6.2 bln, as equity purchases slowed following three months of sizable acquisitions.
