Janury 11, 2022

On Tuesday, markets rose as the FED chair’s testimony to congress was viewed as soothing. It seems the market does not think interest rates will rise too drastically. The S&P 500 was up 0.9% and Toronto was up 1.0%.

It almost seems that the market WANTS to keep going up. It wants to believe that interest rates won’t rise much. Only time will tell.

Oil was strong with West Texas now at US $81.50. This has pushed the Canadian dollar up to US 79.6 cents. Therefor oil is $102 Canadian and this bodes very well for Alberta.

TD was out with a new issue today. A 2.0% Hydro Quebec bond that matures in 6.5 years. The issue sold out quickly. It’s baffling why anyone would buy this. There are GICs that pay more although those are locked in. The buyers of these bonds must be counting on interest rates not rising and inflation going back well under 2%.  One thought is that it is maybe large institutions like pension funds buying these. But the minimum order was $5000 and the maximum was one million dollar. It appears that these bonds have been bought mostly by small investors. I don’t quite get it. I’d rather keep money in cash earning almost nothing than lock it in for 6 years at a rate apparently below inflation.

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