Market Commentary

April 3, 2014

Canada's merchandise trade balance swung into surplus in February led by auto and energy exports.  Overall exports rose 3.6% with a 2.2% increase in volumes.  Imports rose 2.1%. 

In the U.S. the trade deficit widened in February, expanding by about $3 billion.  Forecasts had called for a modest contraction. 

The ISM non-manufacturing composite rose about a point-and-a-half, to 53.1 in March.  That is a little shy of expectations.  More encouraging, the employment sub-index rose nearly six points.  The service sector is responsible for about 80% of the hiring in the U.S. economy.

The weekly read on first time applications for unemployment benefits in the U.S. jumped by 16,000.  Forecasts had called for a much smaller increase.  The four week rolling average edged up by a negligible 250.

The European Central Bank has once again held the line on interest rates, maintaining it's benchmark rate at 0.25% for the ninth time.

North American markets were mixed in early trading.  Wall Street was up and the TSX was down.

Bond yields are up 1 bps.

by First National Financial LP 3. April 2014 05:33

April 2, 2014

Private sector hiring accelerated in the U.S. last month.  The latest read by payroll processor ADP shows private sector employers added 191,000 jobs in March, just a shade under expectations.  Hiring for February was revised significantly upward, from 139,000 to 178,000.  Official government numbers for employment are out Friday for both the U.S. and Canada.

U.S. factory orders beat expectations in February coming in with a, seasonally-adjusted 1.6% increase.  Orders for non-defence capital goods excluding aircraft, which is seen as a measure of business confidence and spending plans, fell 1.4% rather than the previously reported 1.3% drop. 

North American markets were higher in early trading.

Bond yields are up 3 - 4 bps.

by First National Financial LP 2. April 2014 09:56

April 1, 2014

Canadian industrial producers saw inflation increase by 1.0% in February. The increase was driven by higher prices for energy and petroleum products. Statistics Canada estimates about 0.2% of the increase can be traced to the depreciation of the loonie against the U.S. dollar. Year over year IPPI growth slowed to 1.8% in February compared to 2.3% in January.

February's Raw Materials Price Index rose 5.7%, its fastest monthly pace since June 2009, when it rose 6.2%.

In the U.S., the ISM index shows manufacturing growth accelerated slightly in March. It rose half a point to 53.7 compared to February, just shy of forecasts. Ten of 14 industries tracked showed gains.

And U.S. construction spending rose just 0.1% in February, led by non-residential building. Still, it beat expectations for a 0.1% decline.

North American markets were higher in early trading.

Bond yields are -1 to +3 bps.

by First National Financial LP 1. April 2014 10:18

March 31, 2014

The key report of note today is Canadian GDP for January.  The Canadian economy expanded by 0.5% in the first month of the year, rebounding from a similar contraction in December, and pretty much in line with the higher end of expectations.

Statistics Canada's payroll survey shows a loss of 7,000 jobs in January.

Looking ahead to the rest of the week we'll get reads on producer price inflation in Canada, the ISM take on growth in the manufacturing and non-manufacturing sectors of the U.S. economy, along with American factory orders and a look at private sector employment.  The week ends with government employment numbers in both the U.S. and Canada.

North American markets were all higher in the early going, ahead of a speech by U.S. Fed Chair Janet Yellen.  Earlier this month markets went into a dizzy over comments by Yellen that were interpreted as hinting interest rates could rise sooner than expected.

Bond yields are up 5 bps.

by First National Financial LP 31. March 2014 06:44

March 28, 2014

The week comes to an end on a relatively quiet note.  The only report of interest is a second read on American consumer sentiment for March.  The University of Michigan's survey shows sentiment at 80.0.  That is down from last month and a little lower than expectations, but it is higher than this month's preliminary read.  The survey suggests American consumers see the current and future economic situation as weaker.  

Earlier this week The Conference Board's read on consumer confidence clocked in with a 4 point increase.

Next week gets underway with a look at Canadian GDP for January.

North American markets were higher in early trading.

Bond yields are down 2 bps.

by First National Financial LP 28. March 2014 06:24

March 27, 2014

The latest read on the broader American economy shows it did better than previously estimated in the fourth quarter of last year.  U.S. GDP increased at an annualized rate of 2.6% in the last three months of 2013, driven by consumer spending.  

Most of the economic growth in the second half of last year came from businesses stockpiling inventory.  That's expected to translate in more tepid results for the first quarter of this year.

Pending home sales in the U.S. dipped in February.  The National Association of Realtors index of pending re-sales slipped 0.8% to 93.9

North American markets were all lower in early trading. 

Bond yields are up 1 bps.

by First National Financial LP 27. March 2014 07:54

March 26, 2014

There is only one significant report on the calendar today and it offers an important look at American manufacturing.  Durable goods orders for February were better than expected, bouncing back from two straight monthly declines. 

Orders for products designed to last three years or more rose 2.2% last month. The increase was more than a full percentage point better than forecast.  

Orders for non-defence capital goods excluding aircraft, which are seen as a proxy for business spending plans, unexpectedly fell 1.3% in February.  It had risen by a revised 0.8% in January.

North American markets seemed to like the numbers and were all higher in the early going.

Bond yields are down 1 - 2 bps.

by First National Financial LP 26. March 2014 05:51

March 25, 2014

U.S. housing reports dominate today.

The Case-Shiller home price index rose 0.85% in January following a 0.74% rise in December, well above expectations.  On a year-over-year basis the 20 city index is up 13.24%.  That's a slowed down from December and about 0.10% below forecasts.

Washington's read on home prices also rose in January.  The FHFA shows a 0.5% increase over December.  That's a 0.2% slowdown in the month-over-month rate.  The year-over-year numbers show a 7.4% increase. 

Washington is also reporting a sharp drop in new home sales in February.  They fell 3.3% last month, hitting a five year low.  Bad weather and higher mortgage rates are taking the blame for the slowdown.  

Still, the Conference Board's measure of American consumer confidence is up four points this month.  It stands at 82.3, up from 78.3 last month.  

North American Markets were all higher at the start of trading.

Bond yields are down 1 - 3 bps.

by First National Financial LP 25. March 2014 05:51

March 24, 2014

There are no reports on the calendar today and there won't be any Canadian reports this week.  

Things pick up tomorrow with a flurry of data out of the U.S., and most of it will be about housing.  The Case-Shiller home price index is out along with FHFA price index and new home sales figures.  We'll also get a couple of reads on American consumer confidence and an update on U.S. GDP later in the week.

North American markets were lower in the early going.  

Bond yields are down 2 bps.

by First National Financial LP 24. March 2014 05:52

March 21, 2014

Consumer inflation was up sharply in Canada in February, climbing 0.8% over January and coming in higher than expectations.  Forecasts had called for a 0.6% increase.  The annual inflation rate, however, has slowed to 1.1%, down from 1.5% in January and well below the Bank of Canada's 2% target.

Canadian retail sales rose 1.3% in January, taking back some of the decline measured in December.  Seven of 11 subsectors recorded increases led by the autos.  

North American markets were all higher at the outset.

Bond yields are up 3 - 4 bps.

by First National Financial LP 21. March 2014 04:21