Tuesday, 12 June 2012

Canadian Bonds See Selling as Calm Emerges in Equity Markets

Canadian government bonds are in negative territory Tuesday with U.S. Treasurys as fixed-income assets are dragged lower while signs of stability emerge in equities.
The 10-year bond was yielding 1.795% Wednesday, from 1.762% late Tuesday, according to data provider CanDeal. Yields for Canada's two-year bond were at 1.022%, from 1.006%, while the 30-year bond was yielding 2.369%, from 2.338%.
Bond yields move inversely to bond prices.
Canadian bonds were selling off moderately during Tuesday's session as investors continue to digest the news of the proposed 100 billion euro ($125 billion) bailout for Spanish banks announced over the weekend. U.S. Treasurys were also trading lower ahead with new supply of $32 billion in three-year notes to be sold later on Tuesday.
With no significant data releases scheduled for Tuesday, bond markets remain "reasonably range-bound," RBC Capital Markets said in a research note.
That range-bound trade may continue for much of the week as investors view Greece's upcoming elections on June 17 as the next big major market-moving event.

Canada Housing Trust Reopens 5-Year Bond to Raise C$5 Bln

anada Housing Trust reopened its five-year bond maturing June 2017, aiming to raise 5 billion Canadian dollars (US$4.85 billion), according to people familiar with the matter.
Pricing of the offering is scheduled for Wednesday. The spread talk is for about 43 basis points over the Government of Canada 1.50% March 2017 benchmark. The bond carries a coupon of 2.05%.
Canada Housing Trust is part of Canada Mortgage and Housing Corp. (CMH.YY). It uses proceeds from the issue of Canada mortgage bonds to purchase mortgages packaged into National Housing Act mortgage-backed securities.

Canada Should Be in Trans-Pacific Partnership, Canadian, US Business Leaders Say

Leaders of two influential Canadian and U.S. business groups Tuesday called for Canada to be included in the Trans-Pacific Partnership, saying that the country shouldn't be pressured to give up its supply management practice that protects dairy and poultry farmers in return for entry into the trade group.
Canada is keen to join the TPP as it seeks to expand trade with fast-growing emerging markets, a move which acquired added urgency following the Obama administration's rejection of the Keystone XL pipeline project.
It is "absolutely essential" for Canada to be at the table for negotiations for the TPP, according to U.S. Chamber of Commerce President Thomas Donohue, who cited the long-standing geopolitical and security relationship between the two North American Free Trade Agreement partners.
"Canada should be a part of it and we vigorously support it," Mr. Donohue said in an interview here on the sidelines of an economic conference.
Some officials say the U.S. isn't keen to have Canada at the table in the early round of negotiations, which, according to Mr. Donohue, was "encouraged by people that had delusions that they could move more quickly" on the negotiations without new entrants. The idea was that others would be welcomed once an agreement had been nailed down. He disagrees with this notion, saying that it would be better if Canada, as well as fellow NAFTA member Mexico, were at the table.
The TPP, originally signed in 2005, comprises the U.S., Australia, Brunei, Chile, Malaysia, New Zealand, Peru, Singapore and Vietnam. All nine countries have to agree to the inclusion of any new member.
Canada's supply management practice is a potentially sticky issue, but Canadian Chamber of Commerce president Perrin Beatty said all countries have different issues with regards to barriers in their agriculture sectors.
"The whole point of trade negotiations is you don't negotiate in advance," Mr. Beatty said in the joint interview with Mr. Donohue.
Canada's Natural Resources Minister Joe Oliver said separately that the endorsement from the business leaders was "helpful" and "positive."
The business leaders also said they expect TransCanada Corp.'s (TRP, TRP.T) planned Keystone XL pipeline expansion to receive full approval after the U.S. presidential election in November. The project envisions greatly increasing oil exports from Alberta to the U.S.
Mr. Donohue said the rejection of the line earlier this year by U.S. President Barack Obama was a "purely political decision" due to pressure from environmentalists. He said he expects the section of line from Oklahoma to Louisiana to be approved any time now, and for the rest to be given the go-ahead after the presidential election.
"The sooner that it's built, the better it is for the U.S. economy and for U.S. energy security," Mr. Beatty said.
Write to Nirmala Menon at nirmala.menon@dowjones.com
-Karen Johnson in Montreal contributed to this article.

Canada Resources Min: Faster Project Review Won't Exclude Aboriginal Input

Canada's natural resources minister said the federal government's plan to streamline environmental-assessment requirements won't keep aboriginal leaders from having their say on resource projects before they go forward.
Speaking to reporters at an economics conference in Montreal, Joe Oliver said government authorities would be "bringing the aboriginal communities into the process at an earlier stage, so they can be aware of what's happening earlier, and become part of it in a more meaningful way."
In April, Canada's ruling Conservative government said it planned to overhaul Canada's environmental regulatory system, which it said was too complex and was slowing down development of major projects, such as pipelines and mines. The proposed changes include reducing the number of agencies responsible for reviewing projects, limiting regulators to one environmental review per project, and limiting the timeframe for reviews.
The plans were hatched after the U.S. government earlier this year rejected the initial application of TransCanada Corp.'s (TRP) Keystone oil pipeline from Canada amid strong pressure from environmental groups, who are also campaigning against oil pipeline projects such as Enbridge Inc.'s (ENB) Northern Gateway pipeline to British Columbia coast.
The plan has raised some eyebrows in resource-rich Canada, where opposition politicians and environmental groups have said the changes could weaken environmental protections or impinge on aboriginal rights. Aboriginal groups in Canada have the right to be consulted over proposals to develop resources on traditional lands where they have a legal right to harvest, hunt and fish - even if they don't own the land outright.
--Ed Welsch in Calgary contributed to this article.

Canada Environment Min: Faster Project Review Won't Exclude Aboriginal Input

Canada's natural resources minister said the federal government's plan to streamline environmental-assessment requirements won't keep aboriginal leaders from having their say on resource projects before they go forward.
Speaking to reporters at an economics conference in Montreal, Joe Oliver said government authorities would be "bringing the aboriginal communities into the process at an earlier stage, so they can be aware of what's happening earlier, and become part of it in a more meaningful way."
In April, Canada's ruling Conservative government said it planned to overhaul Canada's environmental regulatory system, which it said was too complex and was slowing down development of major projects, such as pipelines and mines. The proposed changes include reducing the number of agencies responsible for reviewing projects, limiting regulators to one environmental review per project, and limiting the timeframe for reviews.
The plans were hatched after the U.S. government earlier this year rejected the initial application of TransCanada Corp.'s (TRP) Keystone oil pipeline from Canada amid strong pressure from environmental groups, who are also campaigning against oil pipeline projects such as Enbridge Inc.'s (ENB) Northern Gateway pipeline to British Columbia coast.
The plan has raised some eyebrows in resource-rich Canada, where opposition politicians and environmental groups have said the changes could weaken environmental protections or impinge on aboriginal rights. Aboriginal groups in Canada have the right to be consulted over proposals to develop resources on traditional lands where they have a legal right to harvest, hunt and fish - even if they don't own the land outright.
--Ed Welsch in Calgary contributed to this article.

Canadian Bonds Retreat as Equity Markets Rally on Positive Sentiment

Canadian bonds pulled back Tuesday, moving broadly lower as North American equity markets rallied during a relatively muted trading session.
Yields for Canada's two-year bond were at 1.024% late Tuesday, from 1.006% late Monday. The 10-year bond was yielding 1.811%, from 1.762%, according to electronic bond trading platform CanDeal.
Yields for the 30-year bond were at 2.382% Tuesday, from 2.338% late Monday.
Bond yields move inversely to bond prices.
After paring losses during the morning session, Canadian bonds retreated, with the longer end of the curve outperforming the rest of the maturity stack, following the sale of three-year U.S. Treasury notes Tuesday afternoon that saw mixed results.
The longer end subsequently receded against the other maturities, resulting in a steeper yield curve than on Monday.
With little economic data scheduled for release this week, investors took cues from external headlines. North American equity markets were supported by comments made by Federal Reserve Bank of Chicago President Charles Evans who called for additional monetary stimulus to be injected into the U.S. economy and led to a sell-off in fixed-income assets.
Europe continued to weigh on market activity as the European Central Bank reiterated that the euro zone needs to create a banking union to help stabilize the region's shaky fiscal outlook.
Canadian 10-year bonds, being highly correlated to U.S. Treasurys, could see yields edge further to 1.7% if confidence in the global economy continues to weaken and their U.S. counterparts move to a yield of 1.5% from 1.663% recently, said Peter Gibson, chief strategist for CIBC World Markets in Toronto.
"You'd have thought that given our better fiscal position that Canadian bond yields would be lower, but you've got a larger, more liquid market and the reserve status of the U.S. so people would tend to go there first," Mr. Gibson said.