Economics

Ian is joined this week by Mike Larson, and the duo kick off the episode by discussing the elephant in the room – the level of interest rates. Ian discusses the mechanics behind the ungluing of global long-end interest rates, while Mike gives his view on swap spreads. The pair talk about why the level of swap spreads should continue to decline, especially given how much 10yr Canadian rates have underperformed the United States recently. Ian gives his view on the absurdity of trading the ‘higher for longer’ and the ‘soft landing’ narrative at the same time. The show finishes with Ian and Mike outlining their favorite trades and which positions are the most crowded.

How things have changed... as recently as April, bond markets were pricing in rate cuts by the Fed and the Bank of Canada before this year was out.

Into the start: Core sovereign bond yields continue to track higher as markets digest last week’s central bank meetings and the ‘higher for longer’ message.

CIBC Capital Markets’ Economist Ali Jaffery joins Bipan Rai to discuss all things US – including the latest FOMC decision, the UAW strike, and what it means for the US economy.

Three major economies got fresh news on inflation in the last week and a half, but judging by how two-year yields reacted, the one with the worst news was the most blessed, and the one that looked the least bad is in the most trouble.

nto the start: Lots of attention on the commodities markets. Prompt WTI/Brent contracts are making fresh highs. Meanwhile, copper prices are on the defensive.

When “data dependance” is the mantra, as it is these days, there’s no point asking the Fed what they’re going to do for you on the interest rate front in 2024.

Into the start: The USD starts the week off on the defensive. That’s largely due from the comments overnight from BoJ’s Ueda as well as the bounce in Chinese lending data which flagged an increase in household demand. The ZAR, AUD and JPY are at the top of the overnight league table.

Declining energy prices were a major factor in quelling Canadian and US headline inflation in the past year, but in the case of oil and gasoline, we’ve reached a turning point.

Bipan Rai and Benjamin Tal talk about the Canadian economy, the domestic housing market and why the number of non-permanent residents (“NPRs”) in Canada is actually higher than what’s reported officially. Please note that this podcast was recorded before the announcement from Statistics Canada that it will revise its methodology for estimating the number of NPRs in the economy.

If you’re up on your English lit, you’d know that it was Shakespeare’s character Fallstaff who advised that sometimes, discretion is the better part of valour...

Even if by a miracle we start doing all the right things to increase housing supply, it will take years for that supply to come to the market. Meanwhile, demand is rising fast...

Into the start: The supportive backdrop for risk in the European session isn’t quite extending to NA equity futures thus far.

Into the start: The cross-asset space is quiet for the most part. There’s a slight biddish tone to risk assets, but that’s about all that’s noteworthy.

The week ahead’s quarterly GDP likely won’t raise any eyebrows, and should be enough to dampen recession fears for a while longer.

Into the start: Risk markets are firmer – though it does feel like disappointment from the PBoC’s decision is keeping some of that in check.

Into the start: Weakness in Asian markets (on the Country Garden news) have been shrugged off so far.

Into the start: Risk markets are taking the Biden announcement in stride. In China, SHCOMP and the CSI 300 both finished up on the session.

When will the Bank of Canada decide that enough is enough, put away their interest rate hike weapon, and even start easing up on rates?

Don’t look now, but the Atlanta Fed’s nowcasting model is projecting a stunning 5.8% growth rate for the US economy in Q3...