Rates are up substantially this morning following comments from a voting member of the Federal Reserve that the economy may be strong enough to allow the Fed to begin raising rates soon. Additionally, data out of the US this morning indicates that Personal Spending in February grew 0.7% (exp. 0.5%), adding to the selloff, on the notion that “Americans are more willing to open their wallets”. The fact that spending grew faster than Personal Income, and that the growth in spending is driven in large part due to rising energy prices appear to not bother the market.

Over the next couple of days, releases include:

-          US: S&P/Case-Shiller Home Price Index, Consumer Confidence (Tue), ADP Employment Report (Wed)

-          Canada: Industrial Product Price Index (Wed)

The bond market is selling off this morning primarily due to a moderation of expectations the market has for the size and scope of the Federal Reserve’s second round of quantitative easing. This recalibration is also affecting currency markets, with the USD gaining against most currencies.

This lift in rates comes in spite of marginally negative economic data, which would usually cause rates to fall. US Durable Goods Orders for September were up 3.3% (consensus +2.0%), but Durable Goods ex Transportation was weak at -0.8% (consensus was +0.5%). The Transportation segment is very volatile so the latter measure is the one that tends to be more closely watched.

At 10am, US New Home Sales for September will be released, and expectations are extremely modest given the high number of existing vacant homes.

There is some important North American data being released on Friday:

-          In the US, this includes the advance Q3 GDP growth estimate and the Chicago PMI

-          For Canada, this includes August GDP growth and the Industrial Products Price Index (Sep)