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(November 10, 2006) Stronger than expected economic data will delay the U.S. Federal Reserve’s move to ease interest rates, but that shift is still coming, according to Marc Levesque, chief strategist for North American fixed income research at TD Securities. The fixed income market appears to be assigning a one-third chance that a rate cut will come before April 2007.

“Despite the weakness in real estate, there is still no evidence whatsoever of a spill-over effect to consumer spending,” Levesque wrote in a briefing note. “Based on the most recent data on personal income and outlays, personal consumption is on track for another 3%-plus gain in the final quarter of the year.”

He is predicting a first cut of 75 basis points at the Fed’s March 21, 2007 meeting, down from an earlier prediction of 100 bps. North of the border, the Bank of Canada is not expected to cut rates before April, but will likely trim rates by 50 bps in the spring.

The Bank of Canada recently lowered its own economic growth forecast, but Levesque says it may still be too optimistic.

“However, with its lower estimate of the economy’s cruising speed, it will take a noticeable U.S.-triggered weakening in Canada’s economic prospects to get it to cut,” he says. “And, that will probably take a bit longer than we thought.”

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ASC posts windfall earnings

(November 10, 2006) The Alberta Securities Commission has released its financial statement for the latest quarter, reporting net income of $6.6 million in the three-month period ending September 30. That compares to a net loss of $1.1 million in the prior year. The provincial government had expected the ASC to report a loss of $2.6 million.

This new-found solvency can be attributed to a $7.6 million insider trading settlement payment received in August. Second quarter fee and investment revenues increased by $542,000, while investment income decreased $311,000.

The ASC raked in $850,000 from additional fees, thanks to increased security distributions. Fee increases averaged 8% on selected fees, totalling $714,000 and commenced October 1, 2006, following public consultation.

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Ontario wants pension input

(November 10, 2006) The government of Ontario is calling for advice on how best to update The Pension Benefits Act, which has not changed much since 1986.

To that end the government has appointed an expert panel, chaired by Harry Arthurs to consult with affected stakeholders in the pension world. The panel will report back in the summer of 2008

The panel will focus on pension funding and surplus; the Pension Benefits Guarantee Fund; full and partial plan windups, plan splits and mergers; asset transfers between pension plans; and funding of defined benefit multi-employer pension plans.

The Association of Canadian Pension Management welcomed Friday’s announcement. “We are really pleased with the government’s decision to establish this commission,” said ACPM president Scott Perkin. “It represents a significant step forward for Ontario’s pension industry. It is a clear indication that the government recognizes the importance of defined benefit pension plans, and the importance of having clear legislation that will allow pension plans to remain viable and sustainable.”

There are more than 7,500 pension plans registered in Ontario, and more than 2 million Ontario pension plan members. Roughly half are defined benefit pension plans.

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Barclays launches five new ETFs

(November 10, 2006) Barclays Global Investors Canada has announced the launch of five new exchange-traded funds to be listed on the TSX, including three fixed income mandates and two equity-based funds.

“Investors asked us for iShares funds which provide exposure to more segments of the Canadian bond market and to value and growth characteristics in the Canadian equity market,” says Rajiv Silgardo, CEO of Barclays Canada. “We’re pleased to satisfy these investor needs with the launch of these new iShares funds.”

The iShares CDN Long Bond Index, the CDN Government Bond Index and the CDN Corporate Bond Index Fund will reflect the movement of the Scotia Capital Long Term Bond Index, the Scotia Capital All Government Bond Index and the Scotia Capital All Corporate Bond Index, respectively.

On the equity side, the iShares CDN Value Index Fund will be based on Dow Jones Canada Select Value Index. The iShares CDN Growth Index Fund will track the Dow Jones Canada Select Growth Index.

(11/10/06)