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 >
Federal Reserve
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 >
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 >
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 >
Inflation ticks up amid seasonal factors and strong growth
The disinflation trend continued to stall in November, according to the most recent consumer price index data released on Wednesday. November marked the first month since April when overall CPI inflation grew by 0.3% monthly, or 3.7% annualized, well above the Federal Reserve's 2% target and a cause ... READ MORE >
Canada’s job market cools as unemployment rises to 6.8%
Canada added 51,000 jobs in November, double the expected number, but the overall picture does not look rosy. The unemployment rate increased by 0.3 percentage points to 6.8 per cent — the highest since January 2017 — as more people looked for work. A slow job market finally hit wages, as wage growth ... READ MORE >
Hiring rebounded in November following weather-distorted October report
The American labor market bounced back in November with the creation of 227,000 jobs, a rebound from the hurricane-related distortions of October and further evidence that the labor market remains remarkably stable. Once one corrects for the noise in the data, the pace of hiring looks to be near ... READ MORE >