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Market Update, Wednesday, November 20, 2013

By Musabbir Mazhar

European Central Bank (ECB) policymakers might take the deposit rate to -0.1% for lenders who deposit excess cash at ECB. The current deposit rate is zero. These policy talks are essentially to take guard against deflation. Jens Weidmann, the German Central Bank president will certainly oppose this policy as he does not want further loosening of monetary policy. The Euro fell 0.6% to $1.3467. Economic growth in the euro area was 0.1% in the last quarter and inflation was at 0.7% for October. The jobless rate is at a record high of 12.2%.

The ECB benchmark refinancing rate is at a record low of 0.25%.

The S&P/TSX composite index declined 12.76 points to 13,430.01. The DJIA was down 0.4% to 15,900.80. The S&P 500 and Nasdaq were both down, at 1781.37 (-0.36%) and 3921.27 (-0.26%).

The US 10 year benchmark Treasury note yielded 2.791% which is at a 2 month high from September 18. This came along as the Fed officials said that tapering of bond purchases might happen soon. However, I believe Fed tapering is not coming so soon as the 6.5% jobless rate threshold is far from reached – the current jobless rate is at 7.3% and Janet Yellen is expected to continue bond-buying until matters improve.

Gold declined to $1,246.90 after falling 11.10.

Brent Crude was at $107.94 /bbl (-0.11%) and Crude WTI was at 93.70 (-0.61%). Suncor Energy reported its 2014 forecast today which indicates $7.8 Billion in capital spending and planned production of 565,000 to 610,000 bbl of oil equivalent per day. Overall Oil production is expected to increase by 10% Y/Y for the company. Oil Sands production is expected to go up by 14% which will offset the decrease due to the sale of $1Billion natural gas field earlier in April 2013 by the company. Suncor Energy Inc. closed at $37.85 (+0.53).

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