The speech focused on how, when interest rates are close to the zero bound, the Fed should “act quickly to lower rates at the first sign of economic distress”. Investors interpreted this dovish speech as a signal…
Highlights Six months into a credit expansionary cycle, China’s economic recovery remains fragile. Lack of government support for the auto and property sectors is undermining a cyclical recovery. Accommodative monetary policy is…
Highlights So What? U.S. policy uncertainty adds to a slew of geopolitical reasons to remain tactically cautious on risk assets. Why? U.S. fiscal policy should ultimately bring market-positive developments – though the budget…
We decompose the fed funds rate cycle into four phases based on the interaction between the level of rates and their direction, as follows: Phase I represents the early stage of the withdrawal of monetary stimulus. This…
Canadian data has been firing on all cylinders of late, so it was no surprise that Governor Stephen Poloz decided to keep interest rates on hold today. That said, details in its monetary policy report were notably cautious…
Oil prices will remain volatile as markets work through the lingering effects of tighter financial conditions prevailing last year, which, along with extended angst over Sino-U.S. trade tensions, slowed commodity demand growth (Chart of…
Our U.S. Investment Strategy team took the Fed’s focus to mean that it was wary of entering the next recession with one arm tied behind its back, given our personal view that it is reluctant to embark on subsequent rounds…
Those three primary reasons are: countering the domestic threat posed by a potential worsening of trade tensions, making conventional recession-fighting measures more robust, and insulating the expansion from both market wiggles…
The U.S. economy remains near full employment. Investors therefore concluded that the “insurance cut” telegraphed by the Fed ahead of next month’s FOMC meeting stands a very good chance of finally goosing…
The zero bound constraint remains a formidable threat. It does make sense to try to raise inflation expectations in order to allow real rates to fall deeper into negative territory in the event that a recession occurs. The sharp…