The Weekly Bottom Line - April 20, 2011

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TD Economics

The Weekly Bottom Line

www.td.com/economics

April 21, 2011

HIGHLIGHTS OF THE WEEK United States • With only a few economic releases on tap, sovereign debt issues stepped back into the spotlight this week. In Europe, mounting speculation that Greece will have to announce a restructuring of its sovereign debt, sent the yield on 2-year Greek notes north of 22.0%. Stateside, Standard & Poors, for the first time, placed their U.S. triple-A credit rating on negative watch. • Debt restructuring in Greece will alleviate immediate fiscal hurtles, but it will not eliminate the need for continued fiscal adjustment and structural reforms. • In the U.S., the S&P’s shot across the bow may be the catalyst get policymakers off the sidelines and focus their attention on reaching some degree of agreement on how to address the nation’s long run fiscal challenges. Canada • Investors continued to acquire the Canadian dollar in droves this week, bidding up the loonie to a fresh three-and-a half year high of 1.05 US dollars. • All major drivers lined up in favour of currency strength, including U.S. dollar weakness, commodity prices and Canadian economic data releases, which caused markets to consider an earlier rate hike by the Bank of Canada. Still, for the most part, the loonie’s climb continued to be largely a story of stronger Canadian fundamentals. • Looking ahead, while the factors that have recently been strengthening the currency should remain supportive, we don’t expect another significant leg up.

THIS WEEK IN THE MARKETS Current*

Week Ago

52-Week 52-Week High Low

Stock Market Indexes S&P 500 1,335 1,315 1,343 1,023 S&P/TSX Comp. 13,929 13,822 14,271 11,093 DAX 7,288 7,147 7,427 5,670 FTSE 100 6,008 5,964 6,091 4,806 Nikkei 9,686 9,654 11,213 8,605 Fixed Income Yields U.S. 10-yr Treasury 3.38 3.50 3.81 2.38 Canada 10-yr Bond 3.29 3.37 3.72 2.69 Germany 10-yr Bund 3.27 3.43 3.49 2.12 UK 10-yr Gilt 3.54 3.69 4.04 2.83 Japan 10-yr Bond 1.24 1.30 1.36 0.85 Foreign Exchange Cross Rates C$ (USD per CAD) 1.05 1.04 1.05 0.93 Euro (USD per EUR) 1.46 1.45 1.46 1.19 Pound (USD per GBP) 1.66 1.64 1.66 1.43 Yen (JPY per USD) 81.7 83.5 94.5 78.9 Commodity Spot Prices** Crude Oil ($US/bbl) 111.2 108.1 112.8 66.0 Natural Gas ($US/MMBtu) 4.33 4.12 5.17 3.18 Copper ($US/met. tonne) 9555.3 9389.3 10179.5 6067.8 Gold ($US/troy oz.) 1504.3 1474.2 1504.3 1141.5 *as of 11:30 am on Friday, **Oil-WTI, Cushing, Nat. Gas-Henry Hub, LA (Thursday close price), Copper-LME Grade A, Gold-London Gold Bullion; Source: Bloomberg

WEEKLY GAINS vs U.S. DOLLAR Australian dollar

1.67

Japanese yen

1.61

British pound

1.49

Swiss franc

1.33

Canadian dollar

0.99

Euro

0.96

Brazilian real

0.63

Mexican peso

0.47

N. Zealand dollar

0.21 -1

0

1

2

3

Source: Bloomberg

GLOBAL OFFICIAL POLICY RATE TARGETS Current Target 0 - 0.25% Federal Reserve (Fed Funds Rate) 1.00% Bank of Canada (Overnight Rate) 1.25% European Central Bank (Refi Rate) 0.50% Bank of England (Repo Rate) 0.00% Bank of Japan (Overnight Rate) Source: Central Banks, Haver Analytics


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The Weekly Bottom Line - April 20, 2011 by Coldwell Banker The Real Estate Centre, Brokerage - Issuu