Curve Your Enthusiasm
Trading the Macro using the Micro
Jul 30, 2024
Brenden Donaher, an Executive Director at CIBC Capital Markets, shares his expertise on short-term interest rate trading. He discusses the Bank of Canada’s dovish tone and its potential implications for rate cuts. The conversation contrasts Canadian and international rate expectations while diving into the impact of macroeconomic factors on cross-currency dynamics. Brenden provides insights into recent Canadian asset trends and emphasizes the need for strategic navigation amidst market volatility and central bank decisions.
28:21
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Quick takeaways
- The Bank of Canada has shifted its labor market stance, acknowledging excess supply, which may influence future wage growth and inflation rates.
- Comparing Canada's monetary strategy to other countries reveals opportunities for traders, particularly due to differing expectations around interest rate changes.
Deep dives
Bank of Canada’s Labor Market Assessment
The Bank of Canada has shifted its stance on the labor market, now asserting that there is excess supply within it. This marks a significant change as the unemployment rate has risen to 7.10% since the beginning of the year, supporting the bank’s assessment. The acknowledgment of excess labor supply could lead to a potential reduction in wage growth over time, which has been a factor in elevated inflation levels. This new perspective indicates a broader concern for managing inflation while maintaining economic growth.
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