The Loonie Hour Governments Have Lost Control of the Bond Market
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May 23, 2025 Core inflation is on the rise in Canada, potentially complicating rate cut plans. As bond vigilantes seize control, the discussion turns to the challenges of increasing long-term interest rates worldwide. The Canada Pension Plan shifts away from its net zero target, influencing investment strategies. Politics heats up with phantom tariffs during election season, while Australia proposes taxing unrealized capital gains, raising concerns among investors and taxpayers. A lively exploration of global economic dynamics and their local effects makes for an engaging listen!
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Canada's Persistent Core Inflation
- Canada's core inflation rose unexpectedly after excluding energy prices.
- Food prices were a significant contributor to this stickiness in inflation.
Japan's Bond Market Risk
- Japan faces a potential bond market crisis due to rising long-term yields.
- This crisis could ripple worldwide, especially affecting US and European markets.
Long-Duration Bonds Amplify Losses
- Rising yields on Japan's long-duration bonds cause enormous losses.
- These losses will impact banks, insurers, and other financial institutions.