The TSX is wrapping up the year in positive territory, and is poised to send 2009 into the record books with its strongest performance in three decades. Commodities have been the main influence with their best collective performance since 1970. Financials are benefiting this morning from yet another drop in US first-time unemployment claims, which have been steadily declining for most of the year and are now down to mid-2008 levels. US indexes declined on the positive news as the market turns its attention toward the inevitable removal of stimulus measures in the coming year. The TSX is up 17 pts. The Dow is off 53 pts.

The Loonie is also closing out the year on a strong note, rising three-quarters of a penny to US$.9553. Bond yields are steady with the 5-year Canada yielding 2.79% and the 10-year 3.63%. Gold is $4.10 higher at US$1096.60/oz. Oil is up 47 cents to US$79.75/barrel.

Happy New Year!

December’s ISM-Chicago gauge of manufacturing activity topped even the most optimistic estimates, as companies expanded this month at the fastest pace in almost four years. This bodes well for the national ISM data due out next Monday, and is another signal that this economic recovery is gaining steam. The US dollar is strong as speculation mounts that stimulus measures will be withdrawn sooner rather than later. Equity markets are flat this morning on light volume, as can be expected this time of year.

The Canadian dollar is off a full-penny to US$.9480 as the effect of increased demand for US dollars is magnified by seasonal illiquidity. Bond yields are slightly lower at 2.77% for the 5-year Canada and 3.63% for the ten. This said, while down from 2.81% and 3.66% yesterday, bond yields have been climbing and considering both benchmarks have risen by roughly 30-40 bps over the last three weeks, I wouldn’t be surprised to see a change in mortgage rates early in the new year. Gold is down $4.20 to US$1093.90/oz. Oil is up 12 cents to US$78.99/barrel.

Season’s Greetings!

The TSX is climbing this morning as a rally in gold and oil prices push their respective sectors higher. Gold has been under serious pressure over the last several sessions, but has finally caught a bid this morning. Oil has pushed up through the top end of its recent trading range after the EIA reported US fuel supplies unexpectedly declined last week. Sales of new homes in the US slipped last month, and although new homes only account for 10% of the market it is considered a more timely indicator of activity in the real estate sector. Consumer confidence is increasing as the pace of job losses slows. Canada’s GDP advanced 0.2% in October, slower than previously forecast, but the 2^nd consecutive month of expansion none-the-less. The TSX is up 40 pts. The Dow is down 11 pts.

The Canadian dollar took flight after finance minister Flaherty suggested yesterday afternoon that China may be ready to add Loonies to their foreign currency reserves. The C$ is up three-quarters of a penny to US$.9527. Bond yields slipped after the GDP report, with the 5-year Canada yielding 2.71% and the 10-year 3.58%. Gold is up $6.30 to US$1093/oz. Oil has jumped $2.11 to US$76.53/barrel.

Season’s Greetings!

US indexes are strong after sales of existing homes climbed more than forecast in November to the highest level since February 2007. Meanwhile, the number of unsold homes on the market decreased to a three year low. Financials are gaining in Canada, but the index is being dragged lower by continued weakness in the gold sector. There’s a decent article in the Wall Street Journal this morning noting that the difference between yields on the 2 and 10 year Treasury bonds (aka: the yield curve) has reached a record, and that the last time the curve was close to being this steep was in 1992 and 2003, both beginnings of sustained economic recovery and both more than a year before the central bank raised interest rates. The TSX is off 18 pts. The Dow is up 33 pts.

Bond yields have climbed across the curve over the last few days with the 5-year Canada yield up to 2.76% and the 10-year 3.61%. The Loonie is grinding higher after last weeks sell-off, up 41 bps to US$.9436 this morning.. Oil is down a quarter to US$73.46/barrel. Gold has shed another $14.70 to US$1081.30/oz.

North American markets charged out of the gate this morning ahead of the Federal Reserve announcement on monetary policy due later today. There has been some speculation that the FOMC will start to remove some of the record stimulus in the system, but they will likely make no move and reaffirm their pledge to keep rates low for the foreseeable future. Canadian large cap companies are almost universally higher this morning as commodities rise on a weak US dollar, and also after factory sales climbed twice as quickly as expected in October, confounding those who expected the appreciation in the Loonie to dampen the manufacturing sector. Housing starts in the US climbed 8.9% in November, while building permits (aka: future construction) climbed to the highest level in a year. The TSX is up 136 pts. The Dow is up 46 pts.

The Canadian dollar is a quarter-penny higher this morning at US$.9449.. Bond yields continue to climb on the positive economic data, pushing the 5-year Canada yield up to 2.55% and the 10-year to 3.40%. Gold is up $16.50 to US$1139.50/oz. Oil is up $2.34 to US$73.03/barrel ahead of inventory reports tonight and tomorrow.

Markets are mixed this morning as strength in energy stocks offsets weakness in base and precious metals. US industrial production increased by an impressive 0.8% in November, showing that the world’s largest economy is picking up steam heading into the new year. Canada’s index of Leading Economic Indicators climbed almost twice as fast as predicted, with housing starts and manufacturing activity leading the broadest increase we’ve seen in more than two years. Existing home sales in Canada hit a record in November, with the average price nationwide now up 19% from year ago levels.. The TSX is up 28 pts. The Dow is off 15 pts.

The Canadian dollar continues to be under pressure from a relatively strong greenback, falling 14 bps to US$.9224 even as oil rebounds. We’ve seen a remarkable reversal of activity in currency markets over the last couple of weeks where the US dollar now strengthens on good economic data, instead of the usual trend where positive news has caused a flight to riskier assets. Bond yields are higher again with the 5-year Canada yielding 2.52% and the 10-year 3.41%. The 30-year bond yield climbed to its highest level this year. Gold is down $3.40 to US$1120.40/os. Oil is up $1.10 to US$70.61/barrel.

Markets worldwide are beginning the week on a strong note after Abu Dhabi pledged to back a portion of Dubai World’s debts, some of which were maturing today and will now be repaid with little delay. Emerging markets climbed on decreasing worries over contagion, while financials like HSBC and Royal Bank of Scotland are rallying on the obvious implications to their loan books. Exxon Mobil agreed to purchase XTO Energy, the largest US natural gas producer, as it tries to beef up reserves and bets that natural gas will benefit from increasing demand due to carbon legislation. Citigroup announced it plans to raise $20 billion after striking a deal with regulators to repay its TARP obligations. Should be plenty of data on the wires this week, but all eyes will be on the Fed’s rate announcement due Wednesday. The TSX is up 119 pts. The Dow is up 32 pts.

The Loonie is just barely in positive territory at US$.9439 as the greenback loses some of its recent momentum. Bond yields climbed as capital flows to riskier assets in light of the announcement from Abu Dhabi, with the 5-year yield at 2.54% and the 10-year at 3.40%. The yield curve in both Canada and the US is currently about as steep as it gets. Oil is flat at US$69.84/barrel. Gold is up $4.50 to US$1124.40/oz.

The TSX opened higher this morning, continuing the rally that pushed into positive territory by yesterday’s close. Energy is leading the way as natural gas has shown significant strength while oil prices drift lower. Canada’s balance of trade unexpectedly swung to a surplus in October for the first time in four months on stronger than expected export volumes and higher prices for gold and oil. This is a good sign that the economy is accelerating from the third-quarters sluggish pace. The TSX is up 21 pts. The Dow is up 82 pts, led by IBM which hit a new 52-week high this morning.

The Canadian dollar is firm on the trade data, even as oil prices decline. The Loonie is up a quarter-penny to US$.9508 this morning. Bond yields are a touch higher with the 5-year Canada yielding 2.52% and the 10-year 3..36%. Gold is up $5.30 to US$1122.70/oz. Oil is off 30 cents to US$70.37/barrel.