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Apr 15, 2010 - Economic Update

Anticipation of Bank of Canada rate hikes are fuelling mortgage increases, high dollar
 ·           TSX +102.89 to 12,204   Banks powered TSX's main index to close at its highest level in nearly 19 months, encouraged by forecast-beating results from U.S. bank JP Morgan, while upbeat U.S. economic data and firmer commodity prices played supporting roles in the rise.
 ·          DOW +103.69 to 11,123    in the U.S., a report Wednesday showed retail sales rose by a better-than-expected 1.6% in March over February
·          Dollar +.27c to 100.08cUS    A number of factors were driving the loonie . The U.S. dollar sold off against most developed world currencies after Singapore announced it would revalue its exchange-rate policy band to allow for "modest and gradual" appreciation. The Singapore move was viewed as a mark of confidence in the economic recovery, helping growth-sensitive currencies like the Canadian dollar. Also, South Korea's sovereign debt rating was raised by Moody's to A1 from A2 . Intel reported better-than-expected earnings and revenue, and provided an upbeat outlook for technology spending, suggesting business spending would lead the U.S. recovery
 ·           Oil +$1.79 to $85.84US per barrel.   Gold +$6.20 to $1,159.00 USD per ounce  
 ·           Canadian 5 yr bond yields +.05bps to 3.13. The spread is centred in the comfort zone  at 1.51
 ·           http://www.financialpost.com/markets/market-data/money-yields-can_us.html?tmp=yields-can_us.

The rate of return on your bond, can be read through a yield curve, If the increase in bond yield  continues to go up, the spread will continue to shrink and this could be a trigger for interest rates to rise. Currently lenders are looking for a spread between 1.35 and 1.60

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