Global yield curves have been moving higher and steeper despite new geopolitical risks and a dovish tilt in recent central bank rhetoric. Can bonds find some solid ground to stand on or do they still have further to fall? Participants: Blake Gwinn (Desk Strategy), Head of US Rates Strategy Jason Daw (Desk Strategy), Head of North America Rates Strategy Gordon Scott (Desk Strategy), Euro Area Economist Robert Thompson (Research), Macro Rates Strategist * Research Analyst opinions are their publis...
Oct 24, 2023•17 min•Season 1Ep. 40
Bond markets keep pushing higher and curves steeper - but why? It appears that a combination of better than expected macro data and central banks communicating that rates will be held around present levels for longer than expected is leading to a repricing. The risk is that this not only continues but also takes hold of other markets, notably in the European time zone, where only a small amount of the rate cuts have been repriced as of yet. Positioning and developments in the Yen market are also...
Oct 10, 2023•19 min•Season 1Ep. 39
The main story in financial markets is fixed income and the relentless surge in yields. We explore why yields have been rising and curves steepening, whether this trend can continue, or what are the necessary ingredients for a turnaround. Participants: Jason Daw (Desk Strategy), Head of North America Rates Strategy Blake Gwinn (Desk Strategy), Head of US Rates Strategy Lori Calvasina (Research), Head of U.S. Equity Strategy Peter Schaffrik (Desk Strategy), Head of UK/European Rates & Economi...
Sep 26, 2023•21 min•Season 1Ep. 38
We have a number of central bank events on deck, with the ECB meeting this week, followed by the Fed and BoE next week. Overall, it seems like it’s coming up on closing time for global hiking cycles, but major central banks may be looking to get one last round of hiking in before the end. Participants: Blake Gwinn (Desk Strategy), Head of US Rates Strategy Cathal Kennedy (Desk Strategy), Senior UK Economist Simon Deeley (Desk Strategy), Canada Rates Strategist Adam Cole (Desk Strategy), Chief Cu...
Sep 12, 2023•20 min•Season 1Ep. 37
Ouch! Bonds have been burned in low liquidity summer markets, adding to the pain (total return losses) of the past two years. The move in bond yields is not unjustified based on fundamentals (now) but the level seems unsustainably high for the future evolution of macro. But can bonds rally in the face of a positioning overhang? Participants: Jason Daw (Desk Strategy), Head of North America Rates Strategy Blake Gwinn (Desk Strategy), Head of US Rates Strategy Peter Schaffrik (Desk Strategy), Head...
Aug 22, 2023•20 min•Season 1Ep. 36
With key central bank meetings due over the coming weeks at the same time, as economic sentiment data is weakening, the question of 'How Long Will It Take?' until rate hikes feed through into the real economy has become more prominent again lately. Meanwhile, the very same question is also asked in China, with the opposite effect in mind. In this episode, we preview the upcoming rate decisions and add our thoughts on the 'how long' question. Participants: Blake Gwinn (Desk Strategy), Head of US ...
Jul 25, 2023•22 min•Season 1Ep. 35
A number of global fixed-income markets have broken higher as central banks are still left to deal with tight labor markets and core inflation that is not falling fast enough for comfort. Can the sell-off continue, overcoming lingering fears of an economic slow-down or will yields quickly pull back down into old ranges? Participants: Jason Daw (Desk Strategy), Head of North America Rates Strategy Michael Reid (Desk Strategy), US Economist Blake Gwinn (Desk Strategy), Head of US Rates Strategy Pe...
Jul 11, 2023•24 min•Season 1Ep. 34
Groundhog Day was a film about the same day repeating itself over and over, which has some parallels to what is happening in markets - policy rates higher, curves flattening, equities unfazed, and USD-CNY marching higher. Will this cycle continue or be short-circuited? That probably depends on what market or country you are talking about. Participants: Jason Daw (Desk Strategy), Head of North America Rates Strategy Blake Gwinn (Desk Strategy), Head of US Rates Strategy Lori Calvasina (Research),...
Jun 27, 2023•21 min•Season 1Ep. 33
Hiking cycles are extending or re-starting later in 2023 than many expected for the BoC and Fed, with the terminal points heavily dependent on the evolution of data in the near term. The BoE is similarly very data dependent, while the ECB looks set to extend its cycle further. Developed market economies have generally "outperformed" in the first half of the year, with expected weakness failing to materialize in hard data (so far). Participants: Blake Gwinn (Desk Strategy), Head of US Rates Strat...
Jun 13, 2023•22 min•Season 1Ep. 32
Debt ceiling negotiations turned out to be a lot less dramatic than many had anticipated – still to come are congressional votes – but once the smoke clears we’re left facing down the back half of the year with many of the questions investors had in January not much closer to being answered – it looks like we have seen peak headline inflation but core is proving to be stickier than many had anticipated. That has led to a reassessment of the policy outlook for the back half of the year – we discu...
May 30, 2023•21 min•Season 1Ep. 31
Debt limit talks are ongoing in Washington, with financial markets already jittery on US banking concerns amid restrictive policy stances across many developed markets. Recent ECB speakers have generally noted they expect further hikes, while the BoE left the door open in its data dependent stance. BoC communication over the last month has emphasized that another hike is very possible and any talk of cuts is premature. How close "to the limit" will central banks take policy? Participants: Blake ...
May 16, 2023•21 min•Season 1Ep. 30
We have a number of major central banks meeting these next two weeks, including the RBA last night, the FOMC, ECB, later this week, and the BOE next week. While each of these institutions may be facing slightly different circumstances, it’s likely that all are nearing a decision point within the next meeting or two, where they have to decide whether to keep pushing against high inflation or trust that they have already delivered enough tightening to sustainably redirect inflation back to target ...
May 02, 2023•23 min•Season 1Ep. 29
Rate volatility continues to be elevated, with policy rate expectations swinging around as determining the terminal rate and what happens afterwards is proving complicated. The unwinding of banking sector concerns accelerated into a more meaningful sell-off and rate hikes continued from most major central banks. Participants: Simon Deeley (Desk Strategy), Canada Rates Strategist, Izaac Brook (Desk Strategy), US Rates Strategy Analyst, Cathal Kennedy (Desk Strategy) - Senior UK Economist, Alvin T...
Apr 18, 2023•22 min•Season 1Ep. 28
The last week felt much calmer than anything experienced since the SVB and CS induced turmoil over the prior weeks. Volatility is much reduced, credit spreads are tighter and primary markets are re-opening again. Can this last and what are the lingering implications for markets and the economy from the March volatility? Participants: Peter Schaffrik (Desk Strategy), Head of UK/European Rates & Economics Blake Gwinn (Desk Strategy), Head of US Rates Strategy Sean Taor (Debt Capital Markets), ...
Apr 04, 2023•25 min•Season 1Ep. 27
It might be an overly simplistic argument, but in hindsight it should not be surprising that aggressive Fed rate hikes broke something in financial markets. Policy actions to ring fence the problems have been fast and furious but can all the kings horses and all the king's men, put dislocated markets back together again? Participants: Jason Daw (Desk Strategy), Head of North America Rates Strategy Nicola Dransfield (Desk Strategy), European financials credit strategist Adam Jones (Trading), Head...
Mar 21, 2023•29 min•Season 1Ep. 26
As hockey and basketball enter the last weeks of the regular season, central banks themselves are approaching the end of their hiking cycles. There is significant divergence among global central banks, ranging from a conditional pause from the BoC in January (which we expect to be reiterated this week) to ongoing tightening messages from the ECB and the Fed. Participants: Cathal Kennedy (Desk Strategy), Senior UK Economist Su-Lin Ong (Research), Chief Australia Economist Simon Deeley (Desk Strat...
Mar 07, 2023•16 min•Season 1Ep. 25
Are markets being fooled by lags? Not unusual for this point in the cycle, some data is coming stronger and some weaker. Recently the market has taken its cue from strong labor market data which might be a mistake. It has only been 6-8 months since large-scale rate hikes started and with monetary policy lags being anywhere from 12-24 months, there is a possibility that the bond market is underestimating the timing and magnitude of the growth downturn. But the patterns are not uniform across coun...
Feb 21, 2023•20 min•Season 1Ep. 24
The US payroll report sent shock waves through the fixed income market. Market pricing shifted aggressively - terminal pricing is now the highest in the cycle and finally consistent with the FOMC dots. Contagion has also spread to other markets. What now? Can the Fed keep hiking, can the BoC stay on hold, how much further will the BoE, ECB, or RBA go? And what are the implications for equities and FX? This episode delves into these topics. Participants: Jason Daw (Desk Strategy), Head of North A...
Feb 07, 2023•18 min•Season 1Ep. 23
Recent months have seen widespread hikes across most G10 central banks, but the potential for divergence is high in the coming months as some central banks are approaching the end of their hiking cycle. Participants: Peter Schaffrik (Desk Strategy), Head of UK/European Rates & Economics Adam Cole (Desk Strategy), Chief Currency Strategist Simon Deeley (Desk Strategy), Canada Rates Strategist Amy Wu Silverman (Desk Strategy), Head of Equity Derivatives Strategy Su-Lin (Research), Chief Econom...
Jan 24, 2023•23 min•Season 1Ep. 22
While upcoming policy increments and terminal values for various countries are highly debatable, Can't, Won't, Don't Stop seems like an appropriate characterization of current near term central bank policy. To reiterate our message from late last year - 2023 could turn out to be as challenging as 2022 but for different reasons. 2022 was how high policy rates would go. In 2023 market expectations should become fractured into the hike, hold, cut camps. Participants: Jason Daw (Desk Strategy), Head...
Jan 10, 2023•19 min•Season 1Ep. 21
BoC/Fed/BoE/ECB are all on tap over the coming week. How high rates will go, whether there will be a quick U-turn to rate cuts in 2023 and by how much, is a central theme for markets that will influence not only yield levels and curve shapes, but also important for FX and broader risk assets. Participants: Jason Daw (Desk Strategy), Head of North America Rates Strategy Simon Deeley (Desk Strategy), Canada Rates Strategist Blake Gwinn (Desk Strategy), Head of US Rates Strategist Peter Schaffrik (...
Dec 06, 2022•23 min•Season 1Ep. 20
2022 was complicated, but it was dominated by a one-sided risk event - how high would rates go. 2023 should be even more complicated; policy scenarios could oscillate between various outcomes depending on the depth of the growth slowdown and inflation dynamics. Participants: Jason Daw (Desk Strategy), Head of North America Rates Strategy Blake Gwinn (Desk Strategy), Head of US Rates Strategy Peter Schaffrik (Desk Strategy), Head of UK/European Rates & Economics Adam Cole (Desk Strategy), Chi...
Nov 22, 2022•24 min•Season 1Ep. 19
All year market pricing for terminal rates in most countries has been a moving target and one directional - higher. Last week the Fed signaled a slower pace of rate hikes but a terminal value that was higher than their previous forecast. Where does this cycle end? Participants: Jason Daw (Desk Strategy), Head of North America Rates Strategy Simon Deeley (Desk Strategy), Canada Rates Strategist Peter Schaffrik (Desk Strategy), Head of UK/European Rates & Economics Daria Parkhomenko (Desk Stra...
Nov 08, 2022•22 min•Season 1Ep. 18
Most central banks are at a maturing stage of the hiking cycle, putting terminal policy rates firmly in focus at upcoming meetings both sides of the Atlantic. Participants: Peter Schaffrik (Desk Strategy), Head of UK/European Rates & Economics Elsa Lignos (Desk Strategy), Head of FX Strategy Blake Gwinn (Desk Strategy), Head of US Rates Strategy Simon Deeley (Desk Strategy), Canada Rates Strategist Michael Tran (Research), Global Energy Strategist * Research Analyst opinions are their publis...
Oct 25, 2022•19 min•Season 1Ep. 17
A made in UK fiscal crisis has led to sharp rises in gilt yields, with the BoE's buyer of last resort interventions disappointing those expecting more QE-type operations. The yield rises have permeated to Treasuries and other developed markets, with important cross-asset implications. Participants: Jason Daw (Desk Strategy), Head of North America Rates Strategy Blake Gwinn (Desk Strategy), Head of US Rates Strategy Peter Schaffrik (Desk Strategy), Head of UK/European Rates & Economics Daniel...
Oct 11, 2022•15 min•Season 1Ep. 16
Fiscal policy has cracked the UK bond market, opened fissures in the Pound, causing ruptures in other bond markets and by extension risk and cyclically sensitive assets. Whether the fault lines in bond markets and risk assets turn into a full blown earthquake remains to be seen, but what is clear is that the high volatility should remain in place for the rest of the year. Stay tuned for our Macro Minutes series to hear from RBC experts on these developments. Participants: Cathal Kennedy (Desk St...
Sep 27, 2022•20 min•Season 1Ep. 15
Central banks are going full throttle to fight inflation by delivering outsized rate increases over multiple meetings. Their job isn't over, and more policy tightening should be forthcoming over the next few months. As they try to find the level of rates that is sufficient to contain inflation, it leads to a high possibility of over-tightening and recession. There are wild times ahead for the bond market and other asset classes. Stay tuned. Participants: Jason Daw (Desk Strategy), Head of North ...
Sep 13, 2022•24 min•Season 1Ep. 14
Many G10 central banks have moved policy rates to a neutral policy setting and are set to send them into restrictive territory with further super-sized rate hikes. Meanwhile, the late-coming ECB is contemplating an accelerated tightening path in the near-term as natural gas and power prices skyrocket due to supply concerns from Russia. How high can policy rates go and when will this cycle end for different central banks? Participants: Peter Schaffrik (Desk Strategy), Head of UK/European Rates &a...
Aug 30, 2022•24 min•Season 1Ep. 13
The bond market overreacted to inflation fears in June and yields overshot on the topside. July was a complete reversal (and some) as growth fears escalated and yields overshot on the downside. Bond market volatility should remain high until there is better clarity on inflation, central bank terminal rates and how deep the impending recession will be, and this will continue to impact all asset class. Participants: Jason Daw (Desk Strategy), Head of North America Rates Strategy Simon Deeley (Desk...
Aug 09, 2022•19 min•Season 1Ep. 12
Central banks are full throttle on rate increases in a throwback to the early 1980's inflation fighting era. The ultimate end game of current central bank policy will be recession. Will this surprise anyone? How quickly will it happen? And what does it mean for financial markets? Participants: Tom Porcelli (Research), Chief US Economist Blake Gwinn (Desk Startegy), Head of US Rates Strategy Peter Schaffrik (Desk Strategy), Head of UK/European Rates & Economics Jason Daw (Desk strategy), Head...
Jul 26, 2022•28 min•Season 1Ep. 11
