Here's Allan Robinson's At The Bell which you'll find in Friday's newspaper:

Investors looking for the all-clear signal are keeping an eye on the U.S. credit crisis and unfortunately things are not getting better at all.

“A lot of mortgage rates are higher now than they were at the start of the mortgage crisis and before the U.S. Federal Reserve Board started to ease,” said Sal Guatieri, an economist with BMO Nesbitt Burns Inc.

The spread or difference between 30-year mortgage rates and 10-year U.S. Treasuries is about 250 basis points, compared with a range of 150 to 175 from 2004 to 2006, according to data provided by the Federal Home Loan Mortgage Corp or Freddie Mac. (A basis point is 1/100th of a percentage point.)

“Credit is more difficult to get and costlier for everyone including top-rated corporations,” Mr. Guatieri said. The effect of the housing crisis has affected A-rated corporations where the spread is almost 300 basis points, about three times as high as it was in 2006, according to Merrill Lynch & Co. Inc.

“The bond markets have been more worried about the credit crisis and its economic implications than the equity markets,” Mr. Guatieri said. “The credit crisis shows few signs of fading any time soon.”

The yield on 10-year U.S. Treasuries at 3.83 per cent remains low when compared with a recent inflation rate south of the border of 5.6 per cent as bond investors appear to worry more about safety than inflation.

“Credit quality and financial spreads of all makes and models have either failed to decline much at all or are making new highs for the cycle,” said Myles Zyblock, the chief institutional strategist and director of capital markets research for RBC Dominion Securities Inc. said in a report to clients.
“Rising spreads have typically placed downward pressure on equity valuations.”

And recent stock market pressure on government sponsored enterprises such as Freddie Mac and Fannie Mae (Federal National Mortgage Association) indicate the mortgage crisis could worsen.

“Healing in the housing market might be a few quarters away – time that Fannie and Freddie and possibly several others in the financial industry probably don't have,” Mr. Zyblock said.

And the growing concern among strategists is that the housing debacle, which morphed into a credit crisis, will soon adversely affect consumer credit cards and car loans.