Interest rate jitters: they’re back

This morning’s retail sales
report came in far above economists’
expectations, fuelling inflation
fears. There were also fears that
the U.S. Federal Reserve Board will
raise interest rates, if not in
October, then possibly in November.
Tomorrow’s Consumer Price Index
will solidify opinion about the
Fed’s next move in. So while
today’s action is down, it is a
rather moderate and orderly slide.

The TSE 300 index has dropped
about 45 points at midday. Volume
is decent at 52 million shares. The
breadth is definitely negative, but
not apocalyptic. The action on the
TSE is 9:7 in favour of advancers.
The volume is more deeply negative,
about 2:1 in favour of sellers.

Among, sectors it’s a familiar
story on the TSE today. Everything
is down but the golds. The interest-
sensitive financials and
industrials are leading the sell.

ATI Tech continues to be
beaten up. It’s the leading trader
on the downside this morning.
Evidence of the negative market
sentiment extends to the benchmark
TIPS. They have traded more than
2.6 million units, and are
currently down 10¢.

TD Bank is down this
morning.
So is its discount brokerage
subsidiary, TD Waterhouse,
which continues to make new all-
time lows. Since its much-heralded
IPO, the firm is sitting at more
than half its high close of $39.
Yesterday’s few gainers,
Laidlaw and Mackenzie
Financial, are trading
strongly, giving up some of those
recent gains.

Paper stock Abitibi is
one the few strong gainers today.
So is Internet play Travelbuys.com.
But the buying is light.

Montreal is sharing in the
gloom. So far it is down about
18 points. The VSE has lost almost
four points. Alberta is the only
resister. So far, it is up four
points.

In New York, the bears are
ruling the day too in response
to the inflation scare. The Dow
is down about 112 points so far,
about a 1% decline, compared to
0.64% on the TSE. The trading has
been very light in New York. One
waggish analyst described it as
“thinner than Ally McBeal.”

Nasdaq has been a little more
resilient. While the composite has
been down most of the morning, the
Nasdaq 100 was mostly up. It has
finally won over the composite,
driving it up four points at
midday. The S&P is currently down
about 12 points too.