Financial Post, Weekly edition, Fri 06 Oct 95, page 17

Jobs data, G-7 should move markets

Bud Jorgensen

Watch for volatility in currency and fixed-income markets today.

Results of September unemployment surveys to be issued early in the morning in Ottawa and Washington will set the tone.

Then trading desks at funds and investment houses will have to make judgment calls on what might happen at the scheduled Saturday meeting of Group of Seven finance ministers.

A complicating factor for investment houses in North America is the fact that Monday is a bank holiday, so currency and bond desks will be closed. Traders always are reluctant to go into a long weekend with exposed positions and this time the G-7 meeting creates potential for a surprise.

The job surveys should provide strong evidence of the condition of North American economies. Employment gains of more than 30,000 in Canada during September and 150,000 in the U.S. will suggest the economies are on a firm growth path.

Weaker numbers will raise doubts and prompt speculation about central bank cuts in regulated rates.

Canadian markets are tilted toward the view that the economy is improving.

On the Montreal Exchange yesterday, the 10-year government bond futures contract touched a high of $108.50. The closing cash price was $107.40, which means the futures price is predicting a decline in bond yields.

Recent market action suggests a confidence in prices for dollars -- C$s and US$s -- and for bonds.

There has been considerable speculation that G-7 ministers will agree on a US$ support program but trading desks likely will be cautious about that prospect.

-

The over-the-counter Yes futures contract that trades in the Montreal financial community closed yesterday at 43.5 on the bid side and 44.5 on the ask. The last trade was at 44.

The trade price indicates the buyer's prediction for the percentage of Yes votes in the Oct. 30 sovereignty referendum.

BENCHMARK YIELDS:

                                     Previous     Spread off
   Bond or bill         Yesterday      close       Canada

   Canada 3-mo. T-bill     6.40         6.37
   U.S. 3-mo. T-bill       5.45         5.46        95
   Canada 10-yr bond       7.69         7.70
   U.S. 10-yr bond         6.07         6.09       162
   Australia 10-yr bond    8.52         8.57       -83
   Britain 10-yr bond      8.03         7.99       -34
   France 10-yr bond       7.53         7.46        16
   Germany 10-yr bond      6.59         6.51       110
   Japan 10-yr bond        2.79         2.79       490
   Canada 30-yr bond       8.09         8.12
   U.S. 30-yr bond         6.42         6.44       167

	This information is provided by the Financial Post.
	Please send comments to: g8@utoronto.ca Revised: May 10, 1996

All contents copyright ©, Financial Post. All rights reserved.