Need To Know News

• October Consumer Credit is expected to gain $3bln following a $6.9bln increase in September and a $6.3bln decline in August, which was the largest monthly decline in over 10 years and the largest drop in history.

Despite the modest rebound in September consumer credit, the downward momentum over the past several months reveals a concerning trend reflecting the spillover of financial market turmoil into all forms of lending. As the unexpected drop in August Consumer Credit preceded the severe credit market deterioration in October and November, downside risk to the October Credit data are many. A negative reading in October is not out of the question as monthly declines in Consumer Credit are likely to become a more frequent occurrence going forward as credit market remained considerably constrained.

• Revolving Credit (e.g. Credit Cards) gained $1bln in September following a 0.3% drop in August
• Non-Revolving Credit (e.g. student loans) gained $5.9bln in September after a $6.6bln drop in August

Bonds caught another strong bid as equity weakness persisted this afternoon. The 30yr added 2 handles, closing just off its high at the 134 mark. The 10yr added a handle, the 5yr gained 17, and the 2yr added 3 ticks.

After Natural Gas storage decreased less-than-expected, Natural Gas plunged deep into negative territory and never recovered. Natural gas immediately dropped 15 cents to 6.20 and continued to fall throughout the morning. It even dipped below the 6 handle before edging back above that level on the close. Natural Gas hasn’t closed this low since Sep-07.

Canada Deposit Insurance Corporation(CDIC) released its annual results today reporting a net income of $48mln. This marks the 12th consecutive year a CDIC member has not failed.
CDIC insured some C$512bln in deposits at its member institutions as of April 30, 2008.
“Our corporate strategies served us well in keeping us on course.”, said Guy Saint-Pierre, CDIC’s President and CEO

MS is 11% higher with JP Morgan gaining 7.5%

Crude rocketed higher on the open and briefly edged over the 47 handle in early trade, but the gains were short lived. Crude would make lower lows for the rest of the day and closed in the red for the fourth straight session. This was the lowest close in front month Crude since Jan-05 with the next significant support is at the $40.