The Canadian economic highlight for today, and the week, is the latest retail sales figures.  The March numbers missed expectations with a flat performance compared to February.  Forecasts had called for a 0.1% increase.  Falling gasoline prices kept the numbers down.   In volume terms retail sales increased 0.7% and were up in six of 11 subsectors. 

In the U.S. the main focus will remain on the Federal Reserve.  Chairman Ben Bernanke is making one of his bi-annual appearances before congress.  Market watchers will be listening carefully to Bernanke, and scouring the latest FOMC minutes, for clues about the central bank’s plans for quantitative easing.

North American equities remained on the up escalator in the early going.

Bond yields are down 2 – 3 bps.

This is another quite day on the data calendar but things promise to liven-up a little starting tomorrow with March manufacturing numbers in Canada and April PPI in the U.S.

Markets continued to be mixed in the early going after yesterday’s mixed, but generally down, finish.  Investors appeared more concerned about soft manufacturing numbers out of China than they were about better than expected consumer spending in the U.S.  Today’s better than expected industrial production numbers out of the eurozone aren’t doing much to shore up sentiment on this side of the Atlantic.  Eurozone manufacturers managed a monthly 1% increase in output in March. Bond yields are flat to -2 bps.

A relatively quiet day for data today with the only report of note being U.S. retail sales for April.  Investors looking for signs of consumer strength will be heartened by a 0.1% increase in retail spending.  Analysts had been forecasting a 0.3% decline.  Cars and clothing led the way in the U.S., compensating for a marked drop in sales at gas stations.

The Canadian data calendar comes to life on Wednesday with existing home sales for April and February manufacturing sales.  The biggest news comes Friday with the release of Canadian CPI for April.

Markets got off to a quiet start today with a pull back from another record setting performance on Wall Street on Friday.  North American equities all opened lower.

Bond yields are up significantly by 6 – 8 bps

Canadian employment numbers are the key piece of economic data today.  The figures for April show a net increase of 12,500 jobs with the unemployment rate holding steady at 7.2%.  

The Canadian economy generated 36,000 new, full-time jobs last month – mainly in the public sector – while shedding almost 24,000 part-time positions.  The numbers matched expectations for a modest improvement over the loss of 54,500 jobs in March.  

North America markets traded higher in the early going today.  They appeared to take a breather yesterday, all trading down and ending the day lower after several days of record high closes.

Bond yields are up by 1 – 3 bps.

Housing is the highlight again today in Canada.  StatsCan’s new home price index for March edged up 0.1% over February.  Calgary led the way.  Year-over-year new home prices are up 2%, a slight slowdown from the 2.1% increase registered in February.  

Internationally, the Bank of England issued its latest policy announcement.  As expected there has been no change.  The Bank’s benchmark interest rate stays at .05% and it is maintaining its stock and bond purchases at 375 million pounds.

The weekly read on first-time jobless claims in the U.S. dropped by 4,000, falling to a fresh five-year low.  The four-week rolling average fell by 6,250.   

Markets didn’t react in any material way, but North American equities all started the day lower.

Bond yields are down 3 – 5 basis points.

Another quiet day for data with Canadian housing starts in April standing as the highlight.  The latest numbers from Canada Mortgage and Housing Corporation indicate builders are taking note of the slowdown in the housing market. 

Home starts for April met the downgraded expectations coming in at 175,000; down from 181,000 in the previous month.  The decline was led by a 3.5% drop in multiple urban starts.  Starts of urban singles were flat.  The six-month rolling average dropped about 3% in April

Equity markets remain upbeat opening higher again today, building on record setting performances from the Dow and the S&P 500 on Tuesday.

Bond yields are essentially flat with a 0 – 1 bps increase.

A very light day for data today so markets will be looking to each other for direction.  In the early going that direction is up.  Traders seem pleasantly surprised with the Australian central bank’s move to cut its policy rate.  The Reserve Bank of Australia has trimmed a quarter of a percentage point off its benchmark rate, dropping it to 2.75%.  The move is an effort to devalue the Aussie dollar and help a flagging export sector, particularly mining.

Japan’s efforts to boost its economy appear to have finally hit the stock markets.  The Tokyo Nikkei closed trading today at a five year high. 

U.S. traders remain encouraged by the better than expected employment numbers from last week.  North American equities opened higher.

Bond yields are up 5 – 6 bps

This will be a relative light week for economic data, but housing and construction will dominate in Canada.  CMHC releases April housing starts on Wednesday and StatsCan has new home prices for March on Thursday.  The other major Canadian release this week will be the April employment numbers which come out on Friday.

Today StatsCan released the March building permit figures.  The report shows an 8.6% jump in the value of permits issued compared to February.  Non-residential permits popped-up by 19%, month-over-month while residential permits slowed considerably marking a 1.7% gain, compared to an 8.1% increase in the previous month.

North American equities markets opened mixed, but generally positive.  The Dow was down, unable to sustain its record breaking performance.  Bond yields are up 3 – 5 bps.

The latest jobs numbers out of the U.S. significantly beat expectations.  April’s non-farm payroll figure jumped by 165,000 beating the 150,000 forecast.  The unemployment rate has dropped to 7.5%, its lowest level in four years.  Today’s report also posted substantial upward revisions for March and February.

Markets are being buoyed by the report.  North American equities all opened higher today.

Bond yields are up 2 – 3 bps.

Also out of the U.S. today:

The ISM service sector index came up short of expectations, printing at 53.1 for April.  That’s down from 54.5 in March and missing the 54 forecast.  And U.S. factory orders dropped 4% in March.  Aircraft led the decline.  But orders for non-defence capital goods, excluding aircraft, rose 0.9%, indicating an uptick in plans for business spending.

The European Central Bank has followed expectations and dropped its benchmark interest rate to a record low.  The Bank trimmed a quarter-point off the rate and it now stands at 0.50%.  The ECB is acting in response to foundering economic data and falling inflation.

North American markets appeared to take heart in the move, opening generally higher and reversing yesterday’s selloff.  Bond yields are generally unchanged.  Yesterday the U.S. Fed maintained its policy rate and QE plan.  But it added a line noting it could increase or reduce its bond buying program depending on need.

The weekly first time jobless claims numbers out of the U.S. should bolster confidence.  They fell to a five year low, dropping by 18,000 to a seasonally adjusted 324,000; contradicting yesterday’s ADP hiring report.  The four-week rolling average fell by 16,000.

In Canada the merchandise trade balance shows a net surplus of $24 million dollars in March.  Exports climbed 5.1% while imports climbed 1.7%, eliminating February’s trade deficit.  Exports to the U.S. rose 4.0% to $29.5 billion in March, on higher exports of motor vehicles and parts, and energy products.