21-May-2010

photo-1840-note-lg

Bond Market Trends

+ Yields on 2 year US notes are 0.71% close to the low in January 2009 of 0.66%. Yields on US 10 year bonds are 3.14% their recent low was 2.05% in December 2008

+ In Canada, 2 year bond yields have increased from a 1.28% in February 2010, to 1.56% currently.

Dave Picton, Picton Mahoney (Notes May 19, 2010)

+ World is fraught with significant macro risks.

+ North American recovery is sustainable but will be sub-par compared to the past.

+ China is slowing down, Dave is expecting a ‘soft landing’ as the Chinese government will always err in growth to avoid civil unrest.

+ European Central Bank and the Fed will keep interest rates low for a much longer period of time; traditionally representing a ‘sweet spot’ for equity markets.

Meredith Whitney – Supports our ‘Step 9’ of Economic Recovery

+ 40 States will raise taxes and cut jobs.

+ The burden on the private sector to create jobs becomes more crucial.

+ Small business continues to struggle to gain access to credit; over the past 2 years more than $1.5 trillion in their credit-card lines have been cut.

+ If banks are not allowed to effectively price for risk, they will not take risk.

+ Important now to support any and all lending activities that enable small business to begin hiring again.

For more information on Step 9 – “In the red zone” Governments Force Turnover, click here