- TSX +158.10 to 13,097.82 (CP) back up over 13,000 points after a stronger than expected reading on American retail sales made traders feel more confident about the recovery prospects of the American economy. The U.S. Commerce Department reported that retail sales in May declined 0.2 per cent, against the 0.7 per cent slide that economists expected.
- DOW +123.14 to 12,076.11 after U.S. Federal Reserve Chairman Ben Bernanke urged Republicans to support raising the U.S. borrowing limit. He said threatening to block the increase to gain deeper federal spending cuts could backfire and worsen the economy.
- Dollar +.83c to 103.21c USD The good news from Canada’s largest trading partner helped push the Canadian dollar up, and was also helped along by oil prices which shook off early losses following the retail report
- Oil -$1.99 to $97.30USD per barrel
- Gold +$8.80 to $1524.40 per ounce
- Canadian 5 yr bond yields markets +.07bps to 2.31. The spread (based on the MERIX 5 yr rate published rate of 3.79%) is mid comfort zone at 1.48 The spread based on the NEW quick close of 3.59% is now well below the comfort zone at 1.28. For clients who are considering locking in an ARM, lock in today to 3.79%! With spreads between ARM and Fixed so slim, many clients are giving serious consideration to the security of 3.59% fixed for 5 years. Unless bond yields reverse direction, these rates can be gone at ANY TIME. Get your fixed rate applications in asap. http://www.tmxmoney.com/HttpController?GetPage=BondsAndRates&Language=en
Failure to lift debt ceiling could be disastrous: Bernanke
Pedro Nicolaci da Costa
Washington, D.C.— Reuters
Published Tuesday, Jun. 14, 2011 2:58PM EDT
Last updated Tuesday, Jun. 14, 2011 7:10PM EDT
U.S. Federal Reserve Chairman Ben Bernanke warned on Tuesday that a failure to lift the government’s $14.3-trillion (U.S.)debt ceiling risks a potentially disastrous loss of confidence in America’s creditworthiness.
Bernanke said in the absence of a quick resolution to the battle over the debt limit, the United States could lose its prized triple-A credit rating, while the dollar’s special status as a reserve currency might be damaged.
“Even a short suspension of payments on principal or interest on the Treasury’s debt obligations could cause severe disruptions in financial markets and the payments system,” Mr. Bernanke said in remarks prepared for delivery at an event sponsored by the Committee for a Responsible Federal Budget.
Inaction could also “create fundamental doubts about the creditworthiness of the United States, and damage the special role of the dollar and Treasury securities in global markets in the long term,” Mr. Bernanke added.
Vice-president Joe Biden and top lawmakers, set to resume budget negotiations on Tuesday, must work around a stark divide on taxes and healthcare as they look for trillions of dollars in savings that would give Congress the political cover to raise the debt ceiling before the government runs out of money.
The Treasury Department has warned the government will begin defaulting on its obligations — whether debt payments or other bills coming due — if Congress does not increase the limit by Aug. 2.
“We could actually have a reprise of a financial crisis, if we play this too close to the line. So we’re going be working hard over the next month,” President Barack Obama warned on Tuesday.