The Federal Reserve reduced its policy rate by 25 basis points to a range between 4.25% and 4.5% at its meeting on Wednesday while communicating to policymakers and the public that its reductions will be on pause until it gets a better sense of the policy changes to come. We are updating our ... READ MORE >
Economics
Housing starts fall below estimates as permits rebound
Housing starts dropped unexpectedly again in November to 1.289 million on an annualized basis, continuing the downtrend that began in 2022. The increase in starts from rebuilding in the South after the hurricanes was not enough to offset declines in the Midwest and the West. But the downside ... READ MORE >
Morning market minute: What the Treasury yield curve is saying about the economy
Three months ago, in the week before the Federal Reserve’s first rate cut in the current cycle, the bond market was pricing in a two-year yield of 3.58%. The two-year yield has since risen to 4.23%, an increase of 65 basis points at a time when the Fed is cutting interest rates. Two-year yields are ... READ MORE >
Rising demand helps U.S. retail sales top forecasts
Retail sales topped forecasts in November, growing at a robust pace for the third month in a row. Sales at retail and online stores increased by 0.7%, according to the Census Bureau on Tuesday. Car sales were behind the increase, yet sales also looked strong in other key components. The control ... READ MORE >
Inflation risk premium suggests higher yields ahead
As the yield on the 10-year Treasury advances toward 4.5%—which is our baseline forecast for next year—the inflation risk premium is supporting that move. The inflation risk premium is the compensation that investors demand for the possibility that inflation may rise, or fall, and that premium is ... READ MORE >
Resignation of Canada’s finance minister before release of fall economic statement adds to uncertainty
(Editor's note: This post has been updated with the latest from the federal government's fall economic statement) Chrystia Freeland’s resignation as Canada’s finance minister highlights increasing uncertainty in the country's political environment as financial challenges loom in 2025. Reaction was ... READ MORE >
Morning market minute: The Fed’s terminal rate estimate needs to be lifted
Ahead of this week’s policy decision by the Federal Open Market Committee and the publication of the November personal consumption expenditures price index, a look at the Federal Reserve’s terminal rate is in order. In the Federal Reserve’s Summary of Economic Projections released in September, that ... READ MORE >
American household net worth sets record, bringing debt-to-asset ratio to 50-year low
American household net worth reached a record in the third quarter, rising to nearly $170 trillion, according to the Federal Reserve on Thursday. The primary driver of this increase was rising equity prices, which added $2.8 trillion, marking the fourth consecutive quarter of significant ... READ MORE >
FOMC preview: A rate cut, followed by a prudent pause
We expect the Federal Reserve to reduce its policy rate by 25 basis points to a range between 4.25% and 4.5% at the Federal Open Market Committee’s meeting on Dec. 18. Given current growth and inflation dynamics, we expect that the Fed’s rate cuts will then be on pause until March at the ... READ MORE >
Bank of Canada cuts interest rate to 3.25% as focus shifts to gap with U.S.
The Bank of Canada lowered its interest rate to 3.25 per cent — an overdue move out of restrictive territory given that inflation has largely been tamed. Expect more rate cuts in early 2025 to get the economy onto an expansionary trajectory. The policy rate should come down to 2.75 per cent within the ... READ MORE >