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On the Path to Rate Hikes - Views from the North

FICC Podcasts February 24, 2022
FICC Podcasts February 24, 2022

 

This week, Fred Nastos and Adam Whitlam, part of the Toronto-based fixed income sales and trading team, join me to preview the upcoming Bank of Canada policy announcement and discuss whether the recent market turmoil persists. 

As always, all feedback welcome.



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About Views from the North

BMO’s Canadian Rates Strategist, Ben Reitzes hosts roundtable discussions offering perspectives from strategy, sales and trading on the Canadian rates market and the macroeconomy. 

Podcast Disclaimer

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Ben Reitzes:

Welcome to Views from the North, a Canadian rates and macro podcast. This week, I'm joined by Fred Nastos and Adam Whitlam from BMO's fixed income sales and trading team.

Ben Reitzes:

This episode is titled on the path to rate hikes. Also note that this podcast was recorded in the afternoon of Wednesday, February 23rd. Before the Russian Invasion of Ukraine.

Ben Reitzes:

I'm Ben Reitzes, and welcome to Views from the North. Each episode, I will be joined by members of BMO's thick sales and trading desk to bring you perspectives on the Canadian rates market and the macroeconomy. We strive to keep the show as interactive as possible by responding directly to questions submitted by our listeners and clients. We value your feedback. So, please don't hesitate to reach out with any topics you'd like to hear about. I can be found on Bloomberg or via email at benjamin.reitzes@bmo.com. That's Benjamin.R-E-I-T-Z-E-S@BMO.com. Your input is valued and greatly appreciated.

Speaker 4:

The views expressed here are those of the participants and not those of BMO capital markets, its affiliates, or subsidiaries.

Ben Reitzes:

Welcome back gentlemen, to the show. Pleasure to have both of you on, once again. I don't think you've been on together just yet. This will make for an excellent show, I think.

Adam Whitlam:

Thank you. I don't think Fred and I have been together in a room this small in probably about, I don't know, 24 months.

Fred Nastos:

That's right. For sure. Yeah.

Ben Reitzes:

COVID fun.

Fred Nastos:

COVID fun. That's right. Yeah.

Ben Reitzes:

We have the Bank of Canada next week, so let's start there. We are at the precipice of what will likely be a series of rate hikes. How many, I guess we'll have to see. I have an opinion. I have an opinion on everything. That's my job. How fast they go, I think that's still somewhat up in the air. The market is pricing some odds of 50 bps in each of the next few meetings, including the coming one, although a little bit less so there, I think. Personally, I wouldn't rule that out beyond this meeting and it's very difficult for me to see the bank backing off at all anytime soon. They've made it very clear that the path on rates is higher. They've also made it really clear by saying absolutely nothing about the odds of 50, that they're probably going 25 on March 2nd. That I'm sticking very much to, but beyond that, I don't have super high conviction because things can change in a hurry, and inflation numbers can move and all that kind of stuff. Adam, why don't we start with you. What do you think about the bank next week?

Adam Whitlam:

Yeah, I totally agree with you. I think the BoC made it very clear that I think they wanted to be more transparent with what they were thinking, after some of the market volatility that we saw at the end of October, and some of the knock-on effects from that. The complete lack of liquidity in the backs market. The market effectively became untradeable for a while there, especially in the front end. I think they want to avoid that. They made that really clear that they're going to be very succinct with what they want to do. I don't think they were obvious or clear enough in the last couple speaking engagements over the last week, to pave the way for 50. So I think 25 locked and loaded 100%. Who knows after that, maybe 50 bps comes up after that?

Adam Whitlam:

I do think we have some pretty juicy inflation prints that are probably going to come up in the next couple of months. You have lots of other central banks. You had the reserve bank in New Zealand overnight that they did 25, which was what was expected, but they certainly had the chat about 50. And that seems to be the trend with most global central banks. I don't see why 50 bps would be off the table for April. That's definitely a possibility. One thing I think the market and market pundits are asking about is, we're still seeing a lot of buybacks pretty regularly in the market, bond buybacks, including the five year sector and 10 year sector-

Fred Nastos:

Twice a week.

Adam Whitlam:

... Twice a week. At some point I think, and at some point being sooner rather than later, we really need to pump the brakes on that. When you get to an environment where you're still buying bonds back twice a week, but you're also hiking 75 bps over two meetings, it's a really confusing message.

Fred Nastos:

They're kind of congruent.

Adam Whitlam:

Yeah. So, maybe that's your 50 bp hike at the first meeting. It's 25 bps, but we're also going to completely stop all the buybacks.

Ben Reitzes:

Deputy Governor Lane very strongly hinted that that is something they will probably be doing. I expect the buybacks to end at the next meeting. As much as it really matters more for May, because the next meaningful maturity is in May. It's March 1, there's a maturity, but the meeting's on March 2nd. So, in theory they're still reinvesting for that March 1st maturity. There isn't one in April. The next one's in May. So, in theory they could stop reinvesting in April. They'd only have to reinvest for this March maturity, but just ending buying all together. The fact that they're buying anything is absolutely ridiculous.

Fred Nastos:

It's amazing from a layman's perspective too. If you're sitting from the outside and you've heard about QE and all this talk about it ending around the world and central banks reducing fiscal stimulus, yet even today, there was more QE being done in Canada. I think if they don't terminate it, it'll just raise a lot of questions.

Ben Reitzes:

What are we missing around all this? Where might me and Adam, Adam and I, have this wrong, Mr. Nastos?

Fred Nastos:

I don't think they can go 50 either. Some of it's priced in, but I think if 50 in the next meeting, you then open up 50 for the next meeting, and we're suddenly at one-and-a-quarter percent overnight by June or April. That might actually have some impact on the economy. That would be a pretty quick bump on people's borrowing rates and so on. I’m in the camp where they go 25 and they go four or five meetings in a row.

Ben Reitzes:

Yeah, definitely. I'm with you at 50. 50's at all are pretty extremes, I think it's going to take a big inflation miss. And so what that? I don't have an answer, but what I can tell you is that my forecast for February CPI and I know we're still in February, it is currently February 23rd in the afternoon. I can't know what prices are entirely this month, but from what I do know, and from the gas price information and all the other stuff we have, I'm getting another chunky print and the year-over-year it goes up to 5.4%, which would be another multi-decade high. And the bank had five-ish over the first half of the year. So I don't know if 5.4 is higher than around 5%, I guess it's probably on the edge there. But there's also a pretty decent probability you get another acceleration in March. And then you're at something north of five-and-a-half percent, at which point I would say you're above five or around five. And then-

Fred Nastos:

Where does that acceleration come from?

Ben Reitzes:

... Some of it's gas prices, some of it's just underlying pressures. You look at the breadth of the price increases and it's everywhere. The share of goods rising at 3, 4, 5, 6% is really high. I broke the basket down into 42 major categories. Not top 42, but 42 categories. About one-third of those are rising at 6% year-over-year.

Fred Nastos:

When will we see the reverse of the base effects from last year happening? Will that be later this fall? Is that when you might expect to come off?

Ben Reitzes:

Second-quarter is when things should start to come off. The second-quarter numbers. So April, May, June, which you get in May, June, July. You should start to see things pull back, but even if you do get a pull back, it's a question of the extent of the pullback. So inflation might crest or maybe let's say I'm right about March. Let's say March prints 5.6 or something. And then in April, May, and June those three, you get some deceleration and we make our way back down to four and change, 4.7, 4.8, something in that neighborhood. You're still way above target and those base effects are now gone. The fact that you're only down a percentage point or so, tells you that there's still a lot of underlying pressure there. And if that underlying pressure persists, and I'm not sure why it's not going to because it is broad, what choice does the Bank of Canada have but to be more aggressive?

Fred Nastos:

Well, I guess it comes back to where this inflation really comes from. We're seeing wages go higher.

Adam Whitlam:

Yep.

Fred Nastos:

Right? Are we re-pricing everything to a new price level? And then we're going to go back to our pre-COVID trends of two-ish plus percent? Or is something actually dramatically changed with, say the balance of labor and capital, and labor will be able to demand a higher price for the next year or two or something like that, right. That's what I'm worried about and I'm always trying to look for those angles and see where that pressure is really coming from. But yeah, obviously the summer is going to be very interesting from the data side.

Ben Reitzes:

A couple. One thing, wages are going to pick up more in Canada. They're actually relatively subdued here relative to the US. They're significantly stronger in the US at the moment. But the base effects for wages are actually super weak a year ago. And so you're going to see a big acceleration in Feb, March. I think four or five consecutive months starting in February. You're going to see a big chunky acceleration there.

Adam Whitlam:

And that's where the alarm bells really start to go off because once it goes up, wage inflation isn't something that is really dynamic, when it goes up, it stays up.

Ben Reitzes:

Well, then that's the question. I feel as if, and I have no basis for this, but I mean, it's hard for me to believe that you're not going to have employees saying, "Well, the price of everything has just gone up by 5 to 10%. I want more money please. 5 to 10%." You have the beginnings of a wage price spiral. I mean, to some extent we saw that in the business outlook survey, in some of the texts that was in there, that it hinted at that. I just don't know how we get away from that. Maybe it's a one-time shift, but that means corporate profit margins then shrink as well. I'm pretty sure they're not going to be comfortable with that. And on top of that, there's comfort in raising prices in a way that there hasn't been for 10 plus years.

Ben Reitzes:

It is broad-based, all producers, all companies sound as if they're much more comfortable raising prices. And they're able to pass those price increases along, and consumers say, "You know what? Okay. I don't really have much of a choice. Luckily there's piles of savings sitting in the background. So it's like, all right. Well, I'll just eat into my savings a bit. That's okay." But there is a limit to that. At some point, again, it is, "I want higher wages" and I suspect we're there. That tells you there's, in my mind, there's still upside for inflation in the second half of the year. You're not going to have a huge deceleration that I think the market sees at this point. Any retort?

Fred Nastos:

Look, I mean, you paint a picture that implies a possibly much higher terminal rate than what is out there. What the market's pricing in. Where do you think that goes though?

Ben Reitzes:

It's hard enough to even know which direction inflation's going, to say how high it's going to go, or how high terminal's going to be. I think higher than where we are now is a pretty decent probability, more so in the US probably than in Canada. We're still slightly above them somehow, some way. Terminal in the US should almost definitely be higher than in Canada. Stronger potential growth, stronger inflation. That should be sufficient. I don't think my argument needs to go beyond that. Yeah, definitely higher. The question would be, how high of a rate can the economy bear?

Fred Nastos:

Yeah. There's some critical rate. You're 25, 50 bps above that and you risk triggering the recession or something like that. And you're 25, 50 bps below that and you're not stopping what you're trying to stop. You're not stopping inflation or at least not enough. Obviously the big question's where is that number? But-

Ben Reitzes:

Well, for the past 10 years it's 175. That's the peak rate in the past decade. But go back another decade and it's 4 to 5% in Canada. Are the 20, 10s the norm, or is that the outlier?

Adam Whitlam:

I mean, my comment to that would be, and I was going to segue this into one of the impediments for the bank in terms of raising rates, is household debt and just debt in general. As these debt loads have grown larger, then that terminal rate vis-à-vis has to come down, because the impact of every basis point higher, is going to have a much larger impact on your economy. To the point with the Bank of Canada, if you look at mortgage creation and mortgage growth in the Canadian market, it is still very heavily weighted to floating rate mortgages. And so in an environment where you know the Bank of Canada's hiking rates. You know rates are going up, it's broadcast everywhere. To have affordability as being a reason for continued floating rate mortgage growth, really says, "Okay, well, this could mean that the number of hikes actually has to be lower because the impact of those hikes is going to be really aggravated."

Adam Whitlam:

I mean, you can see it on Ratehub. How come on Ratehub, I can get a five year fixed rate mortgage at 290, whereas if I'm a bank and I need to use five year funding for that, and credit spreads are now 100, 110 back, I'm funding that mortgage at 315. It's a negative carry trade funding that mortgage in the public debt market, to provide that money to people that you're lending it to at 290. It just shows you that banks are hungry for fixed rate mortgages. That's concerning. That might be one area-

Fred Nastos:

... Are you also just telling people to lock in their rates now? And-

Adam Whitlam:

... I am. I'm telling you if you have a floating rate mortgage and it's quoted at 120 bps above what you've currently got to fix it, go do it.

Ben Reitzes:

Okay. Well, so the flip side on the debt picture. Since the pandemic started, Canadians have saved an extra 290 billion, additional savings.

Fred Nastos:

... You just told us that those savings are going to be used-

Ben Reitzes:

290 billion is way more than enough to pay for inflation and the rate hikes. So, as I know you read my pieces religiously, and so this week I did talk about household debt. You can calculate what the average rate is on the total debt for households, and I extrapolated based on prior rate levels, how much of a cost if policy rates move back to 175. And it would cost about 35 or so billion dollars a year, which is manageable I think at this point, given that savings pile that I just mentioned. The pace of rate hikes matters a lot too, and that's something I've always been keen on.

Fred Nastos:

That's $5 billion-

Ben Reitzes:

Annually.

Fred Nastos:

... annually in the entire Canadian housing market.

Ben Reitzes:

Canadian household, total household debt.

Fred Nastos:

Yeah.

Ben Reitzes:

Not just housing debt, all debt. So the pace matters a lot too. I really should stress this, because over time incomes do go higher. As rates go up you can afford higher payments and it makes it less onerous if those rate hikes are spread over time. And that's where the inflation issue comes into play. Whereas if they're forced to go really fast, then it does have that much more pressure and that there's definitely risk there. Add on top of that the insanity of the housing market, and the fact that prices in middle of nowhere, Ontario, have gone parabolic, is not good.

Ben Reitzes:

It's a recipe for disaster. Not that I'm calling for that by any means, but the risk is far greater, I think, than it has been at least since I've been paying attention. Almost 20 years. Yeah. There's a lot of challenges facing the Bank of Canada in this cycle. We'll see how they meet those. But for now, I think 25 bps at a time, we're all in agreement here. We'll see what the next inflation prints bring and maybe that changes the game for April. We'll see what the fed does in the middle of March. If they go 50, then that makes the bank way more likely to go 50, probably. The market will for sure price in a lot more.

Ben Reitzes:

I think that's part of why there's 30 plus basis points priced into the April meeting at this point. Even though it is so very far away. Let's move on. Different topic here, since I think we've beaten the bank here to death. Just general market sentiment, market tone. Ukraine, Russia, the tensions there. Even ahead of that, the market was wobbly and we are coming on to fed hikes as I mentioned. Sentiment is under pressure here, risk sentiment's under pressure generally. Is this what we should expect for the next few months? Is this going to continue? I think we're nearing an end here. Credit spread's going to keep widening out, or are buyers starting to pop in as things get a little bit cheaper here. Fred, why don't we start with you?

Fred Nastos:

One thing we've been concerned about for a long time is the removal of central bank stimulus affecting credit markets of course, or risk markets. And what you're seeing over the past couple of months, I think is just that realization. That simply there isn't going to be a wall of money underpinning assets, and things are slowly repricing. Even the geopolitical tensions with Ukraine and so on. I mean, to me, we all buy into the narrative that if there's skirmishes there, it's not really going to affect the North American economy. However, it is a catalyst to just push the risk off-tone, and to give people reasons not to step into the market and buy anything. Fixed income itself is just very weak these days.

Fred Nastos:

Obviously rates are going higher. Buyers are hesitant. It's unclear how high rates will go, right. There's some interesting levels out there, like in the market that we're all very close to, which is in the Canadian market. Some of the bond ETFs are back to testing decade level lows here. Just to push a BMO product. If you look at the (ZPL) ETF, which is the provincial bond index. That's touching the lows that it's had over the past 10 years or so. Maybe more like five years. But it's five year lows. So obviously fixing is a weak area right now. I actually think it's going to take a long time.

Fred Nastos:

It might take till after March. You might need the fed to come out for the first meeting to pass. Maybe some reassuring words from policymakers. But if we think back 2018, the market really tested Powell. I think a lot of us remember him at the press conference, you have stocks falling while he's speaking. I don't know if we need a moment like again, but at some point I think the market will test the fed.

Adam Whitlam:

Yeah. I mean, we've seen obviously some pretty big down draft days and there's been headline about correction territory for S&Ps, that sort of thing. I think fixed income markets, to Fred's point, have been softer than that, I think you're seeing some pretty big new issue concessions on deals that need to get done, refinancings that are getting done, especially in the US, there was a US bank deal last week that had a pretty hefty nick, which quickly repriced their entire five-year financial market. I think we'll get these days where spreads are tighter by a bp or two, but generally speaking, there's a lot of reluctance out there. That's really weighed on fixed income, higher quality credits, PROB's, CMBs, have held in relatively well compared to say what's going on in even the high quality corporate credit market.

Adam Whitlam:

I think like Fred said, you need to get the bandaid ripped off. You need to get some of these rate hikes under our belt. See some of the de-leveraging in risk markets continue, see spreads continue to drift wider, but historically, the relationship between higher yields and credit spreads has been tighter credit spreads. And we're not seeing that at this point, it's gone quite the other way. So there will be a point, I don't know how far out that is, I don't think we're that far away to be honest. Maybe it's once we get these rate hikes under our belt, say it's March, April, maybe it's May, when we start to see some stability there. But there will be a great opportunity where the All-In Yields are really attractive for this stuff. Especially for high quality assets like PROB's and CMB's. I just don't think we're there yet.

Fred Nastos:

Yeah. And this isn't the first time we've seen it. There is the original taper tantrum in 2013. We had rates going higher with equities going lower and spreads going wider. Saw it again in 2018. And yeah, in both cases you needed policy makers to reassure the market.

Ben Reitzes:

I think what is weighing most on the market is uncertainty about the fed and how far they need to go. We don't know how high rates will go and so that's weighing on risk sentiment. The difference between now and the past, pretty much all three of our careers, when higher rates didn't mean wider spreads they meant tighter spreads, because rate hikes mean the economy's doing well. Except for now they're hiking rates because of inflation. And so the economy's still in good shape, but the fear is that the inflation pushes them to go too far, and then that it destroys the economy and then you get back to a place where you don't want to be owning risky assets. I think that's the fear in the market.

Ben Reitzes:

That's why spreads are heavy pretty consistently. Because we just don't know yet what regime we're actually in at this point. I mean, at least March minimum, the March meeting, maybe if they were able to go 25 and they say, "We're not going to be super aggressive here." It's 25 per meeting until something like material changes or we're just way offside here, because it takes 12 to 18 to 24 months for rate hikes to have an impact anyways. So it's not as if you're 7% to 8% inflation point's going to turn lower automatically. It doesn't happen next month, it happens a year from now.

Fred Nastos:

You see what happened? He wanted to move away from the bank and the fed and he's turned back.

Ben Reitzes:

Oh, yeah.

Fred Nastos:

And we're back.

Ben Reitzes:

It's who I am and that's what I like at heart, is central bank policy making.

Fred Nastos:

I think people don't realize how different of a world you might have with a terminal rate at 2% versus 3%.

Ben Reitzes:

Yeah. Well that's exactly, that uncertainty is the crux of exactly what's going on.

Fred Nastos:

That 100 basis points results in two different worlds.

Ben Reitzes:

That 100 basis points moves the discount rate 50% which is absolutely massive.

Fred Nastos:

That's right.

Ben Reitzes:

Absolutely massive. And so that-

Fred Nastos:

Yeah, that goes back to Adam's point about there's a GDP per basis point move or sensitivity, but there's a big difference between 2% and 3%. You're repricing a lot of real assets.

Ben Reitzes:

... And people haven't seen for 3%, for 15 years, pretty much, since the financial crisis. The one thing I'll go back to, and I should have mentioned this earlier on Canadian housing and debt is, you say at least that households have been stress tested at five plus percent on their mortgages. So it would hurt the economy if rates go up, but it doesn't mean housing needs to implode. It just means consumption probably takes potentially a bigger hit the higher rates go, but housing itself should be okay. And then don't forget that we have pretty high immigration rates in Canada. 500,000 people a year is at least the target and that means you got to put all those folks somewhere, which means there's demand for housing.

Adam Whitlam:

Well, there's lots of investor condos-

Ben Reitzes:

And there's that.

Adam Whitlam:

... and investor properties, because like you pointed out in that same piece, the vacancy rate in an area that's "constrained by supply" hasn't really gone down, which you would've expected. So, clearly there's a lot of investors in there with a lot of money in properties. Let's hope they can find some renters.

Ben Reitzes:

Yes. I think they'll manage it if COVID doesn't derail us at this point. All right. Let's wrap things up here, but first favorite trades. Do we have any going into the bank?

Adam Whitlam:

I like hiding out in the front end. I think honestly, it's not the time to go out and deploy duration and the curve is very flat. Could the curve invert? Yeah, that's absolutely possible. I think if the curve inverts, you're probably opening the door for these banks that own massive amounts of bonds on their balance sheet, to start initiating QT and start selling those bonds. There's a real vested interest from the central banks to avoid a curve inversion, and they have all the sheet usage they currently need to reverse that. I probably would prefer hiding out in the short end. Like we were talking about in terms of credit spreads, some of the stuff in the front end looks really attractive. You can buy assets in a two year. They're going to give you compression of, these are high quality assets.

Adam Whitlam:

These are PROB assets. They're going to give you credit spread of a basis point a month for two years. Plus you get the advantage of a really flat yield curve, where we've priced a lot of the central bank tightening into the front end. I think you get paid to hide out there and I think, should things not go your way, that the carry will really compensate you. So owning Ontario 23's, owning Ontario 24's, owning CMB's, in that part of the curve if you need really low risk weight assets, even owning bank product, 2's, 3's, makes a lot of sense.

Fred Nastos:

Those are good ways to have steepeners on. I think that's what you're trying to say basically?

Adam Whitlam:

Yeah.

Fred Nastos:

Yeah. I mean, it can happen that the curve will probably flatten some more, but if you're going to have a steepener on, want to take advantage of that two to three area where credit scores have come off quite a bit, you now have a very positive carry steepening structure on. There's a lot of protection there flattening those.

Ben Reitzes:

I agree. I think the curve still flattens, at least looking at some steeping trades and making sure it focused on a carry, because it is probably going to take some time until we re-steepen. So if you can max out the positive carry there, then those trades might be worthwhile just sitting on them and waiting and get some protection against things going wrong, because you don't really know when something's going to go the wrong way, when things might go pair shaped. I'm also a fan of Canada, US here. I think Canada still has value. As I mentioned, the US terminal rate still has to be higher. Maybe notably higher than in Canada. They're still much further offsite on inflation than we are. And I don't think that's going to change near term. I think there's still room for Canada to perform probably across most of the curve, at least out to 10 years.

Fred Nastos:

Related to that, what do you think is going on with the dollar? The loony. I'm sorry.

Ben Reitzes:

The Canadian dollar?

Fred Nastos:

Yeah.

Ben Reitzes:

I mean, I don't really have a great answer. My best answer is oil and the dollar are not correlated the way they once were, because we don't get the inflows we once did. When oil prices go up, there's no bid to invest in Canadian assets. There's no bid to buy Canadian assets for that matter. And 15 years ago there was. You had guys coming in oil sands and bidding up assets left, right, and center. That just isn't the case anymore. And as much as oil prices help, they help revenue, they help income, they help all that stuff, more money flows into the country. It's just not the same growth driver and flow of funds driver-

Fred Nastos:

Do you have that number handy? How much is... Yeah.

Ben Reitzes:

... I mean, anecdotally you can just go back to 5, 6, 7, 2005, and look at all the people bidding for the oil sands assets. It was just a frenzy and it's the opposite now. Now it's difficult to raise money if you're a Canadian oil producer because of VSG reasons more than anything else. And it's made for a more challenging environment and that actually reinforces the inflation impulse, because once upon a time oil would go up, Canadian dollar strengthens, okay, oil and Canadian dollar terms actually isn't as high.

Fred Nastos:

Well, that's why I went there because you mentioned the US, the inflation problem or the inflation situation being worse there, but I just don't see why Canada will be much better here. I mean, it's-

Ben Reitzes:

Well, part of it's the index in fairness, but they've been open longer than we have, I guess maybe they're ahead of us from that perspective, just the fact that they're ahead of us in the recovery. And maybe our inflation impulse is coming-

Fred Nastos:

... Well, when people go to the grocery store, they don't care what the index says. Roughly the same produce that their American counterparts are buying too.

Ben Reitzes:

... Yes. Yeah. You're right. I mean, maybe we're just behind because we're behind on the recovery. And we are behind them on the recovery and so maybe we'll catch up from that perspective, and there's maybe more inflation coming. US wages are already higher than Canadian wages. So yeah, you could be right on that front and I could be very much wrong. But my other counterpoint would be the bank backed off of QE far before the fed did. So there's, in total, a little bit less monetary stimulus here than there. At least we pulled back a little bit quicker to-

Fred Nastos:

Yeah.

Ben Reitzes:

... and we'll see. All right, guys. Well, thanks for coming on the show.

Adam Whitlam:

Our pleasure. Thanks a lot for having us.

Ben Reitzes:

Thanks for listening to Views from the North, a Canadian rates and macro podcast. I hope you'll join me again for another episode.

Speaker 4:

This podcast has been prepared with the assistance of employees of Bank of Montreal, BMO Nesbitt Burns Inc. and BMO Capital Markets Corp. (together, "BMO") who are involved in fixed income and foreign exchange sales and marketing efforts. Accordingly, it should be considered to be a product of the fixed income and foreign exchange businesses generally, and not a research report that reflects the views of disinterested research analysts. Notwithstanding the foregoing, this podcast should not be construed as an offer or the solicitation of an offer to sell or to buy or subscribe for any particular product or services, including, without limitation, any commodities, securities or other financial instruments.

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We are not soliciting any specific action based on this podcast. It is for the general information of our clients. It does not constitute a recommendation or a suggestion that any investment or strategy referenced herein may be suitable for you. It does not take into account the particular investment objectives, financial conditions, or needs of individual claims. Nothing in this podcast constitutes investment, legal, accounting or tax advice, or a representation that any investment or strategy is suitable or appropriate to your unique circumstances, or otherwise constitutes an opinion or a recommendation to you. BMO is not providing advice regarding the value or advisability of trading in commodity interests, including futures contracts and commodity options or any other activity which would cause BMO or any of its affiliates to be considered a commodity trading advisor under the U.S. Commodity Exchange Act. BMO is not undertaking to act as a swap advisor to you or in your best interests and you, to the extent applicable, will rely solely on advice from your qualified independent representative in making hedging or trading decisions. This podcast is not to be relied upon in substitution for the exercise of independent judgment.

Speaker 4:

You should conduct your own independent analysis of the matters referred to herein, together with your qualified independent representative, if applicable. BMO assumes no responsibility for verification of the information in this podcast, no representation or warranty is made as to the accuracy or completeness of such information and BMO accepts no liability whatsoever for any loss arising from any use of, or reliance on, this podcast. BMO assumes no obligation to correct or update this podcast. This podcast does not contain all information that may be required to evaluate any transaction or matter and information may be available to BMO and/or its affiliates that is not reflected herein.

Speaker 4:

BMO and its affiliates may have positions, long or short, and effect transactions or make markets, in securities mentioned herein, or provide advice or loans to, or participate in the underwriting or restructuring of the obligations of, issuers and companies mentioned herein. Moreover, BMO's trading desks may have acted on the basis of the information in this podcast. For further information, please go to bmocm.com/macrohorizons/legal.

 

Benjamin Reitzes Managing Director, Canadian Rates & Macro Strategist

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