Markets are a bit more cautious this morning, which is more evident in the pullback of the 5yr rate. Some of this stems from the ongoing earthquakes in Japan and recent reports that the long term fallout of the Japanese nuclear incident may surpass Chernobyl. I cannot say how accurate this is, but I don’t think traders are waiting for the IAEA report either.
Some of the North American data that came out was disappointing however:
- The Canadian trade balance for February was nonexistent (exp. $0.5bn)
- The US trade deficit for February was $45.8bn (exp. $44.0bn)
Finally, as expected, the Bank of Canada decided to keep its overnight rate at 1.0%, but its language shifted, hinting at more rate hikes sooner than later. But with a strong dollar and a world where some kind of crisis or other has managed to consistently arise over the past several years, there are enough headwinds and potholes ahead to keep the Bank from getting too alarmed.
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