IN THE NEWS:
Canada is Not Safe From World Debt
According to Mark Carney, Bank of Canada governor, “Canada’s fiscal strength is an advantage, but the country still will feel the impact of debt problems in other parts of the world.” The governor gave no hint about his own long-term plans for interest rates in Canada which suggested he will not hike the policy rate on May 31.
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Home Sales Decline Due to New Rules?
The Canadian Real Estate Association blamed new mortgage rules for taking first-time buyers out of the market, as it reported sales slipped 14% in April compared to 2010. The new rules brought in by the federal government, which took effect at the end of March, eliminated 35-year amortizations as a financing option. “Changes to mortgage regulations that took effect in April 2011 likely sidelined a number of first-time home buyers,” said Gregory Klump, the association’s chief economist.
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MARKET UPDATE:
• TSX +14.19 to 13,391.35 (Reuters) Investors attempt to rally following a string of losses in recent days gave in to further worries that recent strength in commodity prices is on the wane.
• DOW -47.38 to 12,548.37
• Dollar -.59c to 102.65c USD
o The dollar earlier found strength from data showing that Canadian manufacturing sales increased 1.9 per cent to $47.5 billion in March. However, losses picked up following a speech by Bank of Canada governor Mark Carney, where he said a further rise in interest rates will have to be "carefully considered."
• Oil -$2.28 to $97.37USD per barrel
o Oil prices continued to retreat from a 30-month high near US$115 at the beginning of the month amid demand concerns.
• Gold -$3.00 to $1490.60 per ounce
o A series of margin hikes were meant to curb the influence of speculators have also sent commodities lower.
• Canadian 5 yr bond yields markets -.03bps to 2.50. The spread (based on the MERIX 5 yr rate published rate of 4.19%) is above the comfort zone at 1.69. At the other end, the spread on the new 5yr Unpublished special of 3.89% is 1.39, is still slightly below the comfort zone.
