Market Commentary February 17, 2012

Yields are up and so is Canada’s inflation rate. The CPI was pushed higher in January by food and energy prices. Last month’s consumer prices climbed 2.5% Y/Y, a slight increase from the 2.3% Y/Y posted in December. Core inflation – excluding food and energy – came in at 1.6% Y/Y in January, again, a slight increase from 1.3% Y/Y in December. Increased car prices are cited for the increase.

Inflation in the U.S. increased a seasonally adjusted 0.2% in January, for a 12 month, unadjusted rate of 2.9%. Core inflation for 12 months stands at 2.3%.

 

Initial jobless claims in the U.S. dropped to a new cyclical low of 348K in the second week of February, nearly 20K below expectations.

 

And Canada’s international securities transactions report indicates an on-going appetite for Canadian assets. In December foreigners acquired $4.7B worth of securities, including $2.1B in bonds. Foreigners purchased a total of $95.6B worth of Canadian securities in 2011, down from $117.4B in 2010.

 

Next week, look forward to Canadian Retail and wholesale trade numbers, U.S. existing home sales , Canadian Q4 corporate profits and American consumer sentiment.