6. July 2011 10:07
Following the steep selloff in the bond market last week, it was not surprising to see a bit of a bounce early this week but the rally has picked up steam due to some key global factors. Front and center was the third rate hike of the year in China – tighter lending conditions in a key cog in the global recovery does not bode well for risk assets – which is helping drive funds back into bonds.
Also, Moody’s four-notch downgrade of Portugal to Ba2, a non-investment grade rating level, reminded everyone that the Eurozone fiscal troubles run well beyond Greece and were not permanently solved last week.
The rest of the week will be pretty eventful with respect to data. For Canada, the Employment Report for June will be released Friday. For the US, we have: ADP Employment (Thu); Employment Report, Wholesale Trade, Consumer Credit (all Friday).