By James Langton

(January 11 – 12:50 ET) – Can bonds ever be sexy? BMO Nesbitt Burns seems to think so.

BMO Nesbitt’s latest bond strategy report is now available on its Web site in a James Bond-themed presentation in Shockwave Flash format. The report is also available in boring old HTML and PDF formats.

The funky presentation can’t lighten the fundamental gloom surrounding the economy, though. BMO Nesbitt observes, “a growing sense of foreboding” in the world economy, centered in the United States “The latest data show American growth downshifting to its slowest pace in four years, a deepening recession in basic manufacturing, joblessness rising, and consumer confidence stumbling.”

BMO Nesbitt concludes, “Where the U.S. goes, Canada will reluctantly follow. That’s the theme to watch for in 2001, as the outlook for Canadian growth has been scaled back in line with the downshift south of the border.”

The investment dealer suggests that the Bank of Canada will be less accommodating than the U.S. Federal Reserve Board on monetary policy. “A more hawkish stance by the Bank of Canada will help keep Canada/U.S. bond spreads in positive territory, after negative readings for the better part of the past two years.”

Based on this scenario, BMO Nesbitt advises bond investors that, “Our recommended portfolio remains unchanged, with a barbell position in Canadas and an overweight holding of corporates (at the expense of relatively costly provincials).”