Canada’s main stock index snapped a 3 day winning streak yesterday dropping more than 1% as rising yields on U.S. government debt fanned fears that higher borrowing costs for government, consumers and business, could delay an economic recovery. Higher yields on government debt was the exclusive and major factor that caused bonds and equities to decline in value yesterday.

In Canada, the financials sector dropped 2.9%, the S&P/TSX composite index was down 1.4%, at 10,142.16. On the upside, the energy sector rose 0.1% as the price of oil touched a 6-month high near $64 a barrel. This was after Saudi Arabia, OPEC’s biggest member, said the global economy had strengthened enough to cope with oil at $75 to $80 a barrel.

Stocks in the United States dropped with the Dow Jones industrial average falling 2.05%, the Standard & Poor’s 500 Index falling 1.90% and the Nasdaq Composite Index falling 1.11%. The stock market losses followed gains of more than 2% on Tuesday, when data on consumer confidence stoked optimism about an economy recovery.

The price of benchmark 10-year notes was yielding 3.74% yesterday up nearly 0.20% in just 1 day and over 1.25% points in just 6 weeks. In the bond world this is a major, major event and a major, major move.

Things are looking better this morning but not for GM as it likely going into bankruptcy protection within the next 48 hours.

Regards,

Wilfred Vos Bcs, FMA, CIM, CFP, FCSI, DMS, CBV, MBA, CFA

SVP & Partner