Economists who are peering through their magnifying glasses in the hopes of detecting an economic slowing should now move their focus to wages. We had a bit of a bond market rally in July after the weak employment report for June which came in at much lower than expectations. This fed into consensus market opinion as a lower interest rate input and stoked the expectation that the Fed might curtail its interest rate increases. Skeptics, Canso included, were quite astounded by the accompanying wage growth numbers at 3.9% year-over-year.
Read the full newsletter at the link below.Canso August 2006 Corporate Bond Newsletter