The late-year selloff in the bond market has begun to look overextended. Recent trading pushed 10-year yields back down to 4.56% on Jan. 17 after reaching as high as 4.8%. The sudden shift in the market coincided with the growing sentiment that the Federal Reserve will cut the overnight policy rate by ... READ MORE >
interest rates
To understand rising rates and volatility, look to regime change in global economy
Over the past three years, the core analytical framework we have used to understand the post-pandemic economy is that a fundamental structural shift, or regime change, is taking place. It's this shift that explains why long-term interest rates have been rising even as the Federal Reserve has ... READ MORE >
Canada’s consumer price index rises by 1.8% as tax holiday takes hold
Canada’s consumer price index rose only 1.8 per cent in December and declined 0.4 per cent on a monthly basis thanks to the tax holiday and disinflation forces throughout the economy. These developments happened even with higher base effects and gasoline prices rising above their usual seasonal ... READ MORE >
Morning market minute: Regime change and financial conditions
Regime change continues to be the foundation of our analytical framework for the post-pandemic economy. Secular stagnation that for years featured low inflation, low interest rates and plentiful capital has been replaced by competition for capital, higher inflation and higher interest rates. During ... READ MORE >
Inflation improvement stalled in December ahead of price increases
Stalled improvement in the December consumer price index appears to be the growing consensus among policymakers and investors as they await turn-of-the-year price increases. The expected adoption of expansionary fiscal policies, as well as greater restrictions on immigration, are pointing toward ... READ MORE >
Canada’s jobs report exceeds expectations for December
Canada’s jobs report for December exceeded expectations in several ways, a credit to a resilient economy poised to grow as more rate cuts are expected from the Bank of Canada. The economy added 91,000 jobs, and the unemployment rate dropped 0.1 percentage points to 6.7 per cent. The employment rate ... READ MORE >
American exceptionalism: Job gains of 256,000 to temper calls for further rate cuts
American exceptionalism is the primary takeaway from one of the more remarkable years in labor market dynamics over the past half century as the economy generated 256,000 new jobs in December. That increase stands well above the 100,000 to 150,000 level that is necessary to keep employment ... READ MORE >
Trudeau’s resignation spurs uncertainty across Canada’s economy
Justin Trudeau’s resignation as Liberal Party leader and prime minister on Monday ushers in a new wave of uncertainty for the Canadian economy and financial markets. Expect delays in business decisions, sluggish hiring and subdued investments in the immediate aftermath of Trudeau’s resignation. ... READ MORE >
Identifying countries at risk as the U.S. dollar surges
Over the past year the real trade-weighted dollar index has appreciated 6.88% because of a combination of interest rate differentials, strong growth and expectations of reduced regulation, lower taxes and increased government spending. With these trends showing no sign of easing, the greenback will ... READ MORE >
Stubborn inflation not stopping the U.S. consumer from spending
Stubborn and sticky inflation did not prevent the American consumer from tapping rising real incomes in November as the economy approached the traditional holiday season. Personal income increased by 0.3%, personal spending by 0.4% and real spending by 0.3% as households used the 1.1% increase in ... READ MORE >