Curve Your Enthusiasm

Ian is joined by Jeremy Saunders this week, and the co-hosts begin the show discussing the manic week that was. There was not a lot of visibility to the moves in bond and equity markets over the prior few sessions, and Jeremy discusses his view on what was real and what was myth. Ian spends some time talking about the lack of evidence to support a few of the theories that markets are thinking about. The duo spend time talking about the level of interest rates going forward, disagreeing on the most likely direction of longer-term interest rates over the coming weeks. Ian provides his view on what the Bank of Canada is likely to do at their meeting next week, while Jeremy gives an update on his Fed views. The show completes with Ian and Jeremy discussing their favourite expressions of macro themes in the bond market.

Aaron Carter, Executive Director on the Global Collateral Finance Desk at CIBC Capital Markets, joins Ian to unpack significant shifts in Canada’s monetary policy. They dive into the Bank of Canada’s move toward a corridor system and its game-changing implications for CORRA. The conversation shifts to cash flow management strategies, including the complexities of utilizing the repo market. Aaron also sheds light on the upcoming tri-party repo system and its impact on liquidity management, promising a more dynamic interaction with monetary policy.

Stephen Poloz, former governor of the Bank of Canada and current expert in pension plans, shares insights on Canada's economic challenges. He discusses the impact of trade uncertainties post-U.S. election and highlights Canada's structural underperformance compared to other OECD nations. Poloz elaborates on the neutral interest rate dynamics and the effects of higher long-term interest rates. He also emphasizes the importance of adapting investment strategies for Canadian pension plans and the need for productive economic reforms.

Ian speaks with Jeremy Saunders, an expert from CIBC Capital Markets' XVA desk, about the latest U.S. labor market trends and the implications for Federal Reserve policies. They dissect the recent U.S. jobs data and debate whether labor demand is truly declining. Jeremy shares insights on market opportunities amid political election dynamics and the impact on yield curves. They also explore central bank strategies, particularly Canada’s stance, and discuss specific trading ideas for the upcoming week, including predictions on spread curves.

Paul Beaudry, Professor of Economics at UBC and former Deputy Governor of the Bank of Canada, shares insights on recent Fed interest rate cuts and what strong job reports mean for upcoming meetings. Ali Jaffery, a Senior economist at CIBC, discusses the implications of rising energy prices for the Bank of Canada. The conversation also covers the potential effects of the U.S. elections on interest rates and Canada's economy, alongside the balance sheet management and its influence on liquidity. Dive into the dynamic interplay of policy and market forces!

Ian is joined this week by Ali Jaffery in CIBC Economics. The duo begin the episode by taking stock of the intense market volatility seen over the past week, and whether what triggered the moved has a real fundamental basis. Ali discusses the other pockets of strength in the U.S. economy, concluding that the U.S is slowing but not enough to warrant non-standard sized cuts, like 50.0bps. Ian discusses the triggering of the Sahm rule within the context of Okuns Law, and Ali spends time talking about the underlying dynamics of the U.S. labour market. Ian and Ali go back-and-forth on what a faster Fed means for the Bank of Canada, ultimately landing on the view that the Bank can slow down if the Fed is speeding up. Ian finishes the episode discussing his favorite trades, and the implication of what a faster Bank does to 5yr yields, and thus 5yr mortgage rates.

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.

CIBC’s Senior Economist, Ali Jaffery, joins Ian to discuss the upcoming Bank of Canada interest rate decision. They explore forecast changes, the possibility of shifting to forward guidance, impact of a 2025 trade war on global growth, and reasons for recent CORRA dislocations. They also analyze market expectations, divergence between KORA and target rates, US economic outlook, inflation dynamics, and fiscal policy implications.

Nicholas Neary, Managing Director at DV Trading Group, and Ian Pollick discuss the Bank of Canada interest rate cut, policy divergence views, safety of duration markets, yield curve steepening, interest rate relief, HQLA product insights, and favorite trades for the next two months.

Canadian macroeconomics expert Andrew Grantham joins the podcast to dissect the latest job report in Canada, comparing it with the U.S. labor market. They discuss the implications for the bond curve, potential BoC cuts, and how the upcoming cycle could be irregular and shallower than expected.