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The French Connection - Views from the North

FICC Podcasts March 18, 2021
FICC Podcasts March 18, 2021

 

This week, Jean-Michel Beaulieu, part of the Montreal-based fixed income sales team, and Francois Leclerc, one of our provincial bond traders, join me to share their insights on their insights on current Bank of Canada pricing, this week’s Canada Mortgage Bond issue, opportunities in the provincial bond market, some broader macro themes, and, of course, their favourite trade ideas.


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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. 

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Ben Reitzes:

Welcome to the 12th episode of Views from the North, a Canadian rates and macro podcast. This week, I'm joined by Jean-Michel Beaulieu, part of the Montreal based fixed income sales team and Francois Leclerc, one of our provincial bond traders. This week's episode is titled The French Connection.

Ben Reitzes:

I'm Ben Reitzes and welcome to Views from the North. Each episode, I will be joined by members of BMO's FICC sales and trading desk to bring you perspectives on the Canadian rates market and the macro economy. 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 dot 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 female capital markets, its affiliates or subsidiaries.

Ben Reitzes:

I would like to welcome both of you gentlemen back for your second appearance on the show. Our first appearance was among the most listened to episodes. So I expect this one to be at least as good and for you to send it out to all your friends and families. So we get even more listeners this time. Welcome back, guys.

Jean-Michel Beaulieu:

Thank you.

Francois Leclerc:

Happy to be back.

Ben Reitzes:

These are interesting times in the market, rates are seemingly rising relentlessly, at least until today's post Fed rally, but even now we're seeing further steepening as the front end remains pinned down by central banks while the long end continues to suffer amid rising inflation expectations and to some extent rising real yields as well. And that latter part is really been the story for the past month or so, but it does look as though we could see a continued back-up here in the long end, even as the front remains pinned down.

Ben Reitzes:

And I think... I guess we should start with the Fed a little bit here, but only briefly because today is Fed Day and they just announced. And I think it's interesting that they've come out and they've left their dots based on a median basis, unchanged, despite a massive upgrade in their growth forecast and the market's really taking them at their word for the most part. I mean, there's still a rate hike price in 2023, which is about a year ahead of what they're thinking, but they're more or less taken them at their word that they're going to be on hold and be very patient with this and wait for inflation to really pick up and do all that. Despite the fact that we're expecting or they're expecting six plus percent growth this year.

Ben Reitzes:

And I think that's really what consensus is now. So you're going to see a super strong growth, meantime in Canada, kind of similar type of backdrop, or really strong growth, not quite as strong as in the US but around 6% growth, where you don't have the same type of fiscal stimulus here that is going on in the US but still strong and improving backdrop consistently. The Bank of Canada said that they are likely not going to raise rates for 2023. That was based on their January forecast, but still. And since then, again, we've had better growth numbers and the market just doesn't want to believe what the bank has to say. They're pricing the bank much more aggressively putting in a first rate hike in mid 22. So that's similarly to the Fed a year ahead of when the bank of Canada said they're going to go, but it has five rate hikes priced in by the end of 2023.

Ben Reitzes:

So 125 basis points in tightening, that's pretty aggressive. I think from my perspective, at this point, given where we are and given the uncertainty, I guess. Why don't we start with JM? Do you view Bank of Canada pricing as out of whack? Is there something... Is there a trade here? Is the market wrong? And if it is wrong, what's going to be the catalyst to make a change?

Jean-Michel Beaulieu:

I do have to say that indeed, I think the pricing in the front end of Canada is just absolutely nuts. I mean, there's a whole lot of reason why one could think we're pricing and buying that will start much earlier in Canada than in the US but typically as you well know, the Bank of Canada is following the Fed and I believe in this cycle, it will happen. I know that earlier in 2010, we were actually, hiking rates while the Fed was still pegged at zero. But this time around, I mean on less inflation really go way above our expectation. I know that the Bank of Canada, as a clear inflation mandate, which the Fed does seems to be... They changed their mind, the mandate to average inflation target, but definitely there's absolutely no reason the bank of Canada should be that way ahead of the Fed.

Jean-Michel Beaulieu:

I think it's mainly Asian flows, selling Canada, fixed income product, which triggers some stop into a new liquid market. And so I think there's a technical reason to it right now. And it definitely can bring us some interesting opportunity to receive some for structure in the front end in Canada versus the US which has really widened out recently.

Ben Reitzes:

I think here's the problem though. I mean, I would have said a month ago when we had a Bank of Canada rate hike price for kind of late 2022, and Canada call it two-year, one-year was 55 or 60 basis points above the US. I would have said that, "You were already stressed at that point. And I suspect you probably wouldn't have argued with me." Why is now any different? And I guess what's the catalyst for Canada start outperforming. Is it just time or does something have to happen, or maybe it's the US that will drive the trade and not Canada?

Jean-Michel Beaulieu:

I think that it can be both. Actually. I thought that after this Fed, US 5 Year could lift off in terms of yields. And obviously I was wrong. We're having such a nice rally and a 5 Year about five beeps as we speak on today. And while we were out the three beeps before the Fed. So definitely, the market is, I guess, satisfied, by what the Fed told them. I think time might be your best friend here. The thing is that, I mean, we can start a whole different conversation about this whole reflation idea, but there's just no reason to believe as the Fed does actually, that the upcoming inflation will be secular and not temporary. There's definitely inflation coming, we'll see prints above 3% probably, but will it stay there? I kind of doubt, or at least it's too way too early to be conclusive on this matter.

Jean-Michel Beaulieu:

Once the pandemic is behind us, what you can see from the Biden Administration is that they are already pushing back from what they were saying during the election, right? They were talking about a possible student loan [that's probably 00:07:38] that's off and we're talking about a national minimum wage increase, that's off. Even the package was supposed to be $2,000 per person before got downgraded to $1,400. And now we're talking about raising rates... raising taxes, sorry. And so this whole concept of the monetary spigot with the fiscal deficit, which equals to MMT and then inflation starts. For sure, there's a reason to believe it's possible because we haven't seen the fiscal side to be digressive in the last 10, 12 years, but there's some reason to believe that the administration might be a bit reluctant into spending way much more after the current program.

Ben Reitzes:

So we may not get much more of a growth impulse from that perspective. Fair enough. Francois, let's turn to you. You have a book in which you trade risk. How are you viewing the Bank of Canada right now? I mean, I know you don't trade pure rates, but are you [fading 00:08:49] the Bank of Canada at all? Is this, again, from your perspective, is there a catalyst for Canada reaching on a relative basis or rates just going to continue to move higher that the outlook continues to improve?

Francois Leclerc:

Yeah, I think you touched a couple points. I think the outlook definitely continues to improve and improves pretty quickly. We just saw what the very strong payroll numbers that came out, and I think the Bank of Canada is going to revise their forecast for GDP and growth in April pretty aggressively. So do think their environment for bonds, brighter future for the economy, all helping to push rates higher across market. As you touched it, the market seems to believe the Fed more than the bank. I think that might be led by a quicker sell off in fives. I was on the same campus jam going into the Fed thinking fives could go much cheaper on a less stimulus and just the Fed holding the course, bit disappointed. I think the market disregards the five, it seems like the Fed members just held the party line and that the dot plot didn't move as much as I would have anticipated, but I'm pretty bright about the future.

Francois Leclerc:

I think... You see it with the reopenings in the United States, you read plenty of articles that the airports are back and running. They're filled with people. The restaurants were opened up. The vaccination pace is just outstanding, some off the border. And at some point the economy is going to have to fly with its own wings. And I do think it comes quicker than what the Fed keeps saying.

Ben Reitzes:

It seems like they just want to see it actually happen and they're willing... They don't believe the risk to inflation is high enough that if they wait, things will get out of hand. So they're just happy to wait. And what if it comes sooner, then great. And if it doesn't, then now we're happy to wait, but they want to see the growth. They want to see the inflation hard prints before they start to change their tune. And so that's kind of what you said today with podcast of today. It was that they want to see realized numbers before they start to even talk about tapering. That's just at least first quarter growth numbers minimum, and then to move into the second quarter that looks better. So at least a couple meetings away.

Francois Leclerc:

Yeah. And back to inflation, I think... I share some thoughts with Jean about that. I think there's going to be a very quick effect. There's going to be some supplies side impact and just some base number impact from last year as well. So we'll see high prints, but I don't think for many reasons that the inflation's going to last at a high level for a long time. The Bank of America, I did a survey a while back just with what people would do with the generous fiscal package and how they would spend the $1,400. Lots of the input on that came out to be not inflationary at all, right? There's going to be a very high saving rates. They were saying like highly liquid asset for rich people was going to be more than 50%.

Francois Leclerc:

And even the people of US wages below 30 grand, would save as well almost half of that, right? Of what they would get or pay down debt or keep pile liquid assets. So for me...

Ben Reitzes:

The stocks.

Francois Leclerc:

... the impact. Yeah, exactly. Stocks are going to be... Exactly, right? The stock market is going to fly but that doesn't drive real GDP growth and employment. Right? It's different market. I would say you had the Federal Bureau of Labor revising their job growth forecast for the lower paid salary people, which was 5% growth for next 10 years down to negative half a percent. And you had all the big tech companies, biggest CapEx spending in 2022 to replace lower paying jobs with technology and all that. So all that believes me that there won't be the whole workforce that lost their job and especially not the lowest paying part recovering and coming back to the market soon.

Ben Reitzes:

Well, before... I want to talk about inflation a bit more, but I think I just want to get to the Bank of Canada a little bit more first and how pivotal the April meeting looks to be for me. I think it's pivotal for the bank in that... I mean, we've noted the skepticism that the market has with respect to what the bank has said versus how they kind of a little bit more... They believe the Fed a little bit more than they do the bank. And so April is a key meeting because every year in April, they reevaluate, the Bank of Canada reevaluates their view on potential growth. And for the past, I mean, 20 plus years or so bank of Canada policy has been driven by the output gap and the Bank of Canada's view on the output gap.

Ben Reitzes:

Mechanically, that's just potential growth and GDP, and you put those two together and that tells you where the output gap is, given a starting point. And so as growth improves, if there's no change in potential, then the output gap is smaller than it otherwise would be and vice versa. And so, that's part of what's happened in Canada. We've had really big growth surprises. The lockdown in December, January, didn't seem to have much if any impact on the economy. I mean, weakens the retail sales, but amazingly the rest of the economy seems to have come out unscathed and actually better off. And I think that's a huge surprise. And so that means that the growth number for all of 2021 is going to be far north of where the bank thought it was.

Ben Reitzes:

So mechanically, that would mean a smaller output gap and earlier closing of the output gap than what they thought in January. However, and this is the key point, and this is why this may be a pivotal meeting for the bank. One, when they change potential growth, do they kind of upwardly revise past years to kind of widen that output gap a little bit? Which is certainly possible given what Governor Macklem said that even though the unemployment rate was at multi-decade lows pre COVID, they still didn't see any meaningful inflation impulse. And then the other aspect of this that, I think, is kind of more my view than what's going on the street is more of a focus on the labor market. And we saw it in the policy statement. And again, back to that Macklem comment, I just noted.

Ben Reitzes:

I think that they'll start using the labor market as a cross-check on the output gap, and that might enable the bank to signal more Fed-like or maybe gain a little more credibility with the market, similar to what the Fed has at this point and pushed back those rate high expectations a little bit further. I don't see how else they do this. They want to push towards more inclusive growth. This is probably the way to do that at the same time though, we're probably going to get a taper. And Jean, I'm curious, what are your clients saying about the taper that that is likely to come? I think that's pretty much consensus right now that we will get a taper in April. So what are investors thinking that the rates market is going to do on the back of a taper move?

Jean-Michel Beaulieu:

Yeah, so not that much discussion, to be honest with you and in Canada about tapering. It's not a big factor at this stage. I mean, we're having a lot more discussion on provincial reaction, but potentially to tense long the box will, I don't know if we'll talk more about it later, but in terms of the rest of the market rates itself, not really. I think the big questions is more when the Fed is going to taper, because it's going to give us a hint about when they're going to start raising rates. And so a lot more discussion and debate around a possible deeper south of the border.

Ben Reitzes:

Okay. I will save this conversation until closer to the bank meeting when maybe it's a bit more timely and then probably more on people's radars. You mentioned the tens thirties, provincial credit box. Do you guys want to discuss that? You said it's a big topic now in the investor base. What are the jam? Why don't you start with what clients are saying? And then first while, you can give us some color on how the market's trading.

Jean-Michel Beaulieu:

Yeah, sure. So the box basically broke the range, which stand from 2013 to adjust before COVID read between eight beeps to let's say, 13, 14 beeps on the wide. So it was quite a tight range and we've broken to 21, maybe even 22 in terms of that box, it's kind of coming back a bit. The idea being that the bank was buying tens and under and they bought about 17% of the issuance than at each ones. So that's quite a big number. And since the [worm 00:17:59] buying loans, it's obvious that loan should widen out versus tens. But now, the thing is that there're much more potential.... It's a much more complex stray than just the Bank of Canada, QE policy. First of all, if you look at the issuance of provinces, when from a high of 57% in loan, so from 57%, I believe in the second or third quarter of 2019, what were loans provision.

Jean-Michel Beaulieu:

So 30-year and over. And that proportion tumbled to all the way down to 32% lately. So it's true that the bank is not buying loans, but on the other side, provinces themselves issued much less loan. So that should cancel out. It should cancel each other out, but you still saw that big movement in the box. Another reason is I believe there are much less demand, natural demand from pensions and insurers since rates are selling off. And that LDI buying pressure was always there when rates were going down, pension and insurers were buying long product on leverage basically. And now with the convexity of this trade, once rates starts to sell off, they need less assets because their assets are much more convex than their liabilities. And so unless their liabilities starts to go up, you don't need as much assets in long.

Jean-Michel Beaulieu:

And so as long as rates are selling off, it's very well possible that this box continue to widen out. And so my 2 sense, I would say that I think we're in a new range that it looks like the range tends to widen out a bit with time. If you start during the great financial crisis in late 09, and where we are today, there's a slight drift upward in this box. And so it's very well possible that we are in a new range possibly, I don't know, 15 to 22 to 23. And we're closer to the middle of that range now.

Ben Reitzes:

Francois, thoughts?

Francois Leclerc:

Yeah. Well, when the... We talked about the PDBP and the prior of the program coming to an end last time on the podcast, I think you guys discussed possible impacts. My view was that tens were going to underperform on the curve just because of what we've just discussed. So with issuance of provies being mostly intense and then longs and the bank supporting tens while not supporting longs. Longs were trading already based on market demand and activity, I suppose, tens had a bit of a skew. The initial reaction when they brought the program to one purchase a week was that exactly. The box fund pretty aggressively. Everybody thought that was the normal move and the normal reaction. Since then, it reverted back to a recent steeps. As Jean mentioned, I do think the steepness, of that average of that box is deeper now, given conditions, given larger bore in programs and given more issuance from provinces across the curve.

Francois Leclerc:

So I think if you look at, for example, 51s versus deck 30, we're back to 16 and a half, call it today on that box, we've been to load 13, 12, and all the way back to 17 and a bit steeper. I think the wider end of that range, I think probably fair value is anywhere between 15 and 14. And we trade either side of that by a couple of beeps. But yes, I do think we've established a new steeper range. That being said, we seen loads of buying of longs come through from fast money. Putting on box flatteners on from cash buyers. There was lots of cash buying when Canada longs had 2%, it's cheaper since then, but we continue to see the demand. And I think there was a bit of a technicality to a long provies cheapening recently.

Francois Leclerc:

We've seen Alberta come with an ultra-long deal, apparently that was done against some provincial long credit. Also hearing that the Alberta tenure carve out that happened this week was also done versus long provies. So putting pressure on long provinces, on secondary trade and secondary flows and liquidity is at its best, I would say the moment. The market is pretty gappy and the inter broker liquidity is pretty light. So things tend to move pretty quickly, but when the box hit 13, we saw a good amount of real money. And in the 12 area, 12 to 13, we saw a good amount of real money come and sell longs on the box versus tens.

Francois Leclerc:

And we're seeing the opposite right now where people are covering that buying longs, selling tens as a credit trade. There's also a fact that you look at take zero to 48, for example, but it's the highest yields we've seen in multi years, right? We're around to 80, 85, 87, call it. It's a pretty attractive level. And for anyone who doesn't believe inflation is going to be sustained over a long period of time, I think it's an opportunity here to step in and that the long credit positions.

Ben Reitzes:

I hear from both of you that there's some reluctance on the duration front just to have be long duration at this juncture. Even if there's some skepticism about inflation, I mean, the risk is there. And so that's weighed on the market on the long end. I think it continues to weigh in long end. Personally, I suspect that still has a little bit to go both in Canada and the US. I think we will see in both areas. Francois, you mentioned Alberta coming with ultra longs, is that something may be more investors might look at, I mean, pension funds, insurance type investors might look at in order to lower their duration risk through increased convexity? Jean or Francois are you the one... Feel free to chime in on that one.

Francois Leclerc:

Yeah, for sure. And Jean had done some work prior to that, on that exact topic. I do think convexity here comes in extremely attractive with higher yields and the provinces are pricing now. There used to be inversion priced from their regular 30 year and to ultra long bonds, but it seems some recent deals of price that flat or a slight pick. So making those longer duration trade quite appealing. But Jean, you can. Feel free.

Jean-Michel Beaulieu:

Ultra longs are quite an interesting topic obviously because of convexity, there's a ton of convexity in those product now with not only the movement and rates, but definitely the realized wall was basically when you buy convexity, you're buying an option. Your long Vega, basically. And so as Vol is going higher and realized Vol is going higher, you can actually Delta hedge your convexity and capture to movement and rates just as you could Delta hedge an option. Now, I believe the last Alberta was done versus long Alberta. So it was definitely hedged and for the purpose of being Delta hedge. And so yes, on one side there's more optionality on this straight.

Jean-Michel Beaulieu:

On the other side, the curve is much deeper. And that means it's negative carry trade to ultras because... right? You're actually shorting much more 30 year and you hold ultra longs. And since 30 years is.... The whole curve is something like 230 beeps in the US, it's 180 beeps in Canada. So there's a big part of carry you're putting in the garbage basically to all the trade. So there's a risk reward there, but between those two inputs, carry negative carry versus optionality of the trade.

Ben Reitzes:

Fair enough. Thanks for the breakdown there. Very helpful, hopefully for our listeners. I think I'm kind of running short on time here. So a couple more topics before we wrap up. One, I just... Francois, can you quickly go over to this week's CNB new issue? How did it go? Client interest, how's trading post issue? And then from there, I'm going to ask you both for your favorite traits at the moment.

Francois Leclerc:

Yeah. CNB deal was slower than most deals to get across the finish line, I would say. A couple of factors to that is numerous accounts in Canada are using CNB bonds as a proxy to Canadian government bonds, just because of the credit pick for the fair play government guaranteed. So they're going to express curve trades or duration views using CMB's instead of Canada's because that's what they own. So going into it, we had seen a good amount of selling of fives versus to retract into twos, cash selling of tens, pressure from a mortgage originator selling as the mortgage issuance continues to be pretty strong. So there was selling, and then we arrived at the point where the deal was coming right after a 10 year deal that didn't perform well at all. One of the weakest in recent times.

Francois Leclerc:

So I think there was a bit of a scar to investors. So they had a bit of cold feet. That being said, the deal was properly priced. There was a bit of a concession given on the spread and it was well distributed and it went fine. And the five-year sector is trading pretty well. It's actually outperformed tens since the pricing by two and a half beeps, I would say. So a strong five-year performance overall, and the street seems to be way more clean in CMBs at the moment.

Ben Reitzes:

Cool. So that heavy little reluctance going in, but pretty good on the way out. So that's good to hear when the issues go well. All right. Favorite trade ideas, guys. Whoever wants to chime in first, go ahead. You can give me one or two, any kind of trade you want.

Jean-Michel Beaulieu:

So last time we spoke, I was a bullish on risk, bullish on long US treasuries, which obviously was definitely not the good trade to own. I've changed my mind when the Georgia election results came out and we've finally had a blue sweep. And then I knew that the whole structure of the market would change because obviously we were going into a regime of MMT or at least for the foreseeable future. Now, I would say that even though I'm still bare for the longer range, I would say that the sell-off was pretty good aggressive recently. And now US stands are at 165ish. We were at 80 beep six months ago. So I know a lot of people doesn't like to talk about the rate of change in terms of percentage when talking about yield, but still yields bubbled up in terms of the last six months.

Jean-Michel Beaulieu:

So that's quite a lot and it looks like the price action, the sell-off is kind of fading post Fed. And so I would think is that for the short term and interesting trade would be to sell some out of the money payers in the US on tens, let's say one month and year or one month, 30 years, implied Vol at a great run. Normalized Vol on tens was right around the low fifties at the beginning of the year. And it's 87 points now. So definitely getting much more rewarded to sell Vol here.

Jean-Michel Beaulieu:

And so it's kind of a way to get exposed to either consolidation or a rally in rates. And if it continues to sell off, since you sell, let's say 20 beeps, 25, all the money payer one month, the rest is that you get long in this market and equivalent rate of 190 in the US tens which I wouldn't mine really. Cause at some point, if we continue to sell off at this space, Fed will have to act, I believe in it either in terms of operation twist or yield curve control or whatever you like, but they won't let the bump market sell off in their face, in the middle of the recovery. So just a little tactical trade, I think, that can be a rewarding here for the next few weeks, at least.

Ben Reitzes:

That's fair. Yeah. 20 more beeps in the month would... After the movie had would be pretty, it's a big...

Jean-Michel Beaulieu:

Violence, I guess. Yeah, exactly. And wouldn't...

Ben Reitzes:

Probably wouldn't be ignored.

Jean-Michel Beaulieu:

I doubt.

Ben Reitzes:

Francois, what do you got for us?

Jean-Michel Beaulieu:

Yeah, bit of a similar idea. I think, as we said, the pace of the sell-off was extremely quick and violent in rates. And I don't mind a little bit of being long biased here. The long end, I would favor and adding a provincial coupon to that, given the steepness of the credit box and long provies being at a multi-year cheaps. I think it's a good hedge. I think the risk parity as well, should help with if the long end cheapens, provincial spreads should tighten in longer tenures. So one offsetting the other and providing a little bit of a cushion if the duration call isn't right at the moment. But I would adhere on the side of being along the back end of the curve right now with the provincial coupon on it.

Ben Reitzes:

All right. Cool. Thank you, gentlemen. Thanks for joining me once again, and I hope to speak to you both again soon.

Francois Leclerc:

Cheers, then. Thanks for having us.

Jean-Michel Beaulieu:

Thanks guys.

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, Incorporated, and BMO Capital Markets Corporation. 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. We are not soliciting any specific action based on this podcast, but just for the general information of our clients, it does not constitute a recommendation or suggestion that the investment strategy referenced here in maybe suitable for you.

Speaker 4:

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 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 the BMO or any of its affiliates to be considered a commodity trading advisor under the US Commodity Exchange Act. BMO is not undertaking to act as a swap advisor to you, or in your best interest in you. To the extent applicable, we'll rely solely on advice from your qualified independent representative 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 borderlines 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. Any information may be available to BMO and or its affiliates that is not reflected herein. BMO and its affiliates may have positions long or short and affect transactions or make markets insecurities mentioned herein. We've provided advice or longs 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 Director, Canadian Rates & Macro Strategist



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