North American markets are taking a step back this morning after yesterday’s decent rally, mainly due to lingering concerns over Europe’s debt problems. Lack of support for a financial bailout of Greece continues to cloud their future, leading to speculation that they will either default on their debt or be forced to secede from the EU in order to devalue their currency to make themselves more competitive. Meanwhile, the rating on Portugal’s debt was downgraded a notch this morning. Sales of new homes in the US fell to the lowest level on record in February as foreclosures of existing homes sap demand for newly constructed homes, however much of the weakness is being blamed on the poor weather last month. Of note, sales in the West, which was not affected by severe weather, climbed by 21% and posted the biggest year-over-year increase since 2004. Durable goods orders rose in line with forecasts, while the backlog of unfilled orders continues to point to a sustained recovery in the manufacturing sector. The TSX is down 44 pts. The Dow is down 20 pts.
The Canadian dollar is losing steam as currency flows into the safe-haven greenback. The Loonie has shed three-quarters of a penny this morning to US$.9786. Bond yields climbed ahead of BoC Governor Mark Carney’s speech due later today, as the market will look for clues on the timing of future rate increases. The 5-year Canada yields 2.82% and the 10-year 3.51%. Gold is down $13.40 to US$1090.30/oz. Oil is down $1.16 to US$80.75/barrel.
