Approaching 300 - Macro Horizons
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Ian Lyngen and Ben Jeffery bring you their thoughts on the U.S. Rates market for the upcoming week of October 21st, 2024, and respond to questions submitted by listeners and clients.
Follow us on Apple Podcasts, Stitcher and Spotify or your preferred podcast provider.
About Macro Horizons
BMO Strategists discuss the week ahead in the U.S. rates market delivering relevant and insightful commentary to help investors navigate the ever-changing global market landscape.
Ian Lyngen:
This is Macro Horizons, Episode 296: Approaching 300, presented by BMO Capital Markets. I'm your host, Ian Lyngen, here with Ben Jeffery, to bring you our thoughts from the trading desk for the upcoming week of October 21st. And as we can now see our 300th episode approaching on the macro horizon, we cannot help but draw the parallels with the Spartans. They all survived, right? Each week, we offer an updated view on the US Rates market and a bad joke or two, but more importantly, the show is centered on responding directly to questions submitted by listeners and clients. We also end each show with our musings on the week ahead. Please feel free to reach out on Bloomberg or email me at ian.lyngen@bmo.com with questions for future episodes. We value your input and hope to keep the show as interactive as possible. So that being said, let's get started.
In the week just passed, the fundamental updates included a decline in Jobless Claims, which is a net positive for the outlook, as it pertains to the labor market, and a higher than expected Retail Sales print for the month of September. This held true both for headline Retail Sales, as well as for the control group, which has the highest correlation with consumption within the real GDP series. The net takeaway was an upward bias in rates, but one that has occurred within a defined range. And as we look forward, we anticipate that the theme will be one of consolidation, as opposed to a dramatic range break in either direction. The recent Fed rhetoric has, if nothing else, reinforced the notion that the Fed's comfortable shifting to a rate-cutting cadence of 25 basis points per meeting, at least between now and the end of the year, and there's no significant urgency with the pace of rate cuts.
This is very consistent with the messaging from Powell and is also reflected in the higher than 90% probability via market pricing of a rate cut in November. There's also been an uptick in the number of conversations regarding how the Fed might or might not respond to the result of the presidential election. We are of the mind that it certainly won't have an impact on the November decision. And until there's a clear shift in policy, it might not be a consideration until well into 2025. Historically, the Fed has been most comfortable basing policy decisions off of the prevailing known economic data and the trajectory of the real economy, as opposed to any potential shifts on the fiscal side. We struggle to envision that that is going to change anytime soon. We are, however, cognizant that, in the event of a GOP sweep, that many market participants expect that that will either slow the Fed's process of normalization or at least put a floor on terminal to the downside.
So this is also consistent with the general thought that upward pressure on rates will emerge, regardless of who takes the White House and the composition of Congress. We're on board with the notion that the longer end of the curve will cheapen into the end of the year, in the event of a sweep in one direction or another, although we struggle with estimating precisely how much of that is currently priced in. The direction of travel for policy rates is clear and lower, and we do know that there is a change in the White House coming, either to Harris or Trump. We are concerned that this sets the election outcome up to be a classic ‘sell the rumor, buy the fact’ event, i.e., cheapen up the Treasury market into the actual results. Once the results are known, the passing of the event risk, in and of itself, could provide enough incentive to bring in otherwise sidelined buyers.
Such a dynamic has played out several times over the course of this cycle. Originally, when the Fed was hiking rates, the market didn't know when the Fed was going to stop. Once the Fed arrived at terminal and it was clear that policy rates would not be pushed any higher, we saw a wave of buying in the Treasury market. Similarly, once it became obvious that the Fed was going to be in rate cutting mode, we saw a wave of buying that supported Treasuries. We suspect the combination of the emphasis on the election and its eventual resolution will serve as another inflection point that will bring in buying in the Treasury market, thereby capping the degree to which some of the reflationary concerns can push 10 and 30 year yields higher.
Ben Jeffery:
It was a week in the Treasury market where the fundamentals were, frankly, not really in the spotlight. Sure, we got an Initial Jobless Claims print that was a bit stronger than expected and an upside surprise in the Retail Sales Control Group for September. But neither of these data prints held the needed economic weight to really recast the way the Fed is approaching the next meeting or two, or frankly, the market's operating assumption around the forward path of Treasuries and how the interest rate landscape is going to evolve. Instead, one of our biggest takeaways from the week just passed was the price action itself. As the short week began with an extension of the bearishness in Treasuries, only to resolve in dip buying interest and rates that pulled off the highs and while not back to the lows we reached in September, the fact that NFP and CPI have left 10-year yields comfortably below 4.25 demonstrates the bid that continues to keep any sell-off in Treasuries relatively well contained.
Ian Lyngen:
And it's also notable that we have seen breakevens continue to edge a bit higher, and that follows intuitively, given what we have seen play out with the global central banking bias having gone from retaining terminal to a clear concerted effort to lower policy rates, with the exception of the Bank of Japan. We just saw the ECB cut another 25 basis points, as expected, and as we think about the forward path of inflation expectations, we ultimately anticipate that 10-year breakevens won't break above 2.50. But, consolidating between 200 and 240 basis points certainly resonates as we move through in the cycle. This will also contribute to the renewed conversations about the potential for term premium to shift back into positive territory on a sustainable basis. Recall that positive term premium and an upward sloping yield curve tend to go hand-in-hand, although not necessarily. As the Fed moves further along the path of normalization for policy rates, we anticipate that the yield curve will continue to grind steeper.
In the very near term, we continue to expect that the Fed lowers rates by 25 basis points in November, followed by another 25 basis point rate cut in December, and then, shifting to a quarterly cadence in 2025. Now, using that as our base case scenario, we are all too cognizant that the Fed is very much in a data-dependent mode, and as the real economy evolves over the course of the next few quarters, we'll remain on guard for a shift in messaging, as it pertains to the Fed's preferred path of normalization. We find it difficult to envision a scenario in which the Fed simply cuts three times in 2024 and leaves policy rates stable throughout 2025, although we're certainly cognizant that the terminal on the downside debate remains very active.
Ben Jeffery:
And related to all of this and the extent to which the longer end of the curve can see a meaningful return of term premium are the implications of the quickly approaching election, not only from a deficit standpoint, and when it is, coupon auction sizes are going to need to start growing again, but also, from a growth and inflationary perspective and what that means for term premium further out the curve.
Firstly, as it relates to issuance, almost regardless of the outcome of the election in November, both in terms of the White House and the composition of Congress, the earliest we realistically see coupon auction sizes needing to start to climb again is next summer. And frankly, to handicap whether that's the May or August refunding announcement, we'd lean more toward the latter than the former at this stage. Obviously predicting political outcomes and policy agendas that ultimately end up getting passed is well outside our wheelhouse, but at least in the near term, it seems that the conversation around larger auction sizes and the potential for an imminent re-ramp-up of supply in the longer end of the curve is unlikely. And instead, that's going to be a second half of 2025 issue.
However, that doesn't preclude the growth and inflationary implications of either a Republican or Democratic sweep from stoking reflationary concerns pushing breakevens wider and adding a government spending driven boost to growth assumptions over the next few years. We'll argue that the biggest difference, in terms of the market's reaction around the election, is not between whether it's all red or all blue, but rather if it's a sweep by either party or a split government. It's the split government scenario that likely means more difficulty in passing any grand initiatives, and that ultimately will keep the economic impact of the election comparatively muted.
Ian Lyngen:
And within this context, I think it's notable that we have not really seen the polls influence the direction of yields, nor some of the higher profile appearances of either candidate. It seems as though the market, at least for the time being, is content to wait until we have clarification following the election, before investors are comfortable positioning for any potential future changes. That being said, there is a general consensus that, regardless of who takes the White House, that there will be an increase in deficit spending. As a slight offset to that, the Fed's forward path of policy rates will be lower and the Treasury Department is borrowing heavy in the bill market, which means that as front-end yields start to decline, the interest expense component of the deficit spending will be biased slightly lower.
Now, while this certainly isn't going to be significant enough to reframe the conversation around deficit spending, when combined with a strong performance of the real economy, i.e., higher tax receipts, we might see a de-emphasis of the deficit story, as 2025 unfolds. It's also worth considering that, in the event that there's not a sweep, either to the GOP or the Democrats, that the middle of next year, as the debt ceiling issue becomes topical once again and the government is unable to agree on a budget, we could see the potential for another government shutdown, conversations about a delayed payment, et cetera. At this point, it's a very well-traveled path, but nonetheless, something worth keeping on the radar, as we ponder the year ahead.
Ben Jeffery:
And in a market environment with all these moving pieces and no shortage of uncertainty, there is one dynamic that is seemingly very consistent, and that is the continued resilience of risk assets, with equities continuing to make all-time highs, despite monetary policy that's still in restrictive territory, but now, becoming less so. We frequently discuss the implications from stocks that only seem to go up, both in terms of the wealth effect, with what that means for consumer confidence, so willingness to spend, but also, the overall level of financial conditions, as diminished equity volatility and real rates, that have come well off their peaks, continue to be the cornerstones of a financial conditions landscape that is still very easy.
Obviously, the Fed is well aware of this dynamic, and so, despite the 50-BP cut we got last month, the fact that, going forward, the operating assumption is that future moves will be of the 25 basis point variety, it's not wasted on us that even with financial conditions so easy and equities at the highs, the Fed's bias is to continue to bring rates lower. And so, in that context, it's difficult for us at least to make the bear case for domestic stocks.
Ian Lyngen:
And as we watch the market continue to consolidate in a very clear and defined range, one clear theme has emerged, and that is that investors are very much in a “wait and see” stance at the moment. We all have our operating assumptions about the pace of Fed rate cuts and will concede that, to some degree at least, the Fed's path to normalization will undoubtedly be data dependent. In practical terms, however, that means that investors need to see each incremental data point before either solidifying or undermining one's core assumption about each incremental move. Said differently, we are clearly in an environment where the Fed is data dependent, the market is data dependent, and the outlook is data dependent, and so, investors are appropriately content to play the extremes of the range, as we wait and see.
Ben Jeffery:
So where are 10-year yields going? I think we got our answer. It depends.
Ian Lyngen:
If nothing else, we're in a mode that we're doing a lot more waiting than we are seeing. In the week ahead, the Treasury market will have remarkably little in terms of fundamentals from which to derive trading direction. We do have the $13billion 20-year auction on Wednesday, followed by a $24 billion five-year TIPS auction on Thursday. Economic data is limited to Existing Homes on Wednesday, New Homes on Thursday, and of course, the weekly Jobless Claims update. Claims will be less relevant in the week ahead, because Nonfarm Payroll survey week has already passed. Now, this doesn't mean that the market is poised for a particularly strong October payrolls print, rather that, as we make it all the way through the September data cycle, the data theme for October in particular will be one of uncertainty, because of the impact of the hurricanes on the real economy.
Now, that comes in the form of consumption, as well as inflation, and of course, hiring. The challenge for monetary policymakers will quickly become that they'll be flying effectively blind into the next couple meetings, in the event that we have any meaningful degree of distortion in the realized data. Now, while we don't expect that this will prevent the Fed from cutting rates per se, it does go without saying that another half point cut is off the table, at least for the time being. We also have the midweek release of the Beige Book. Now, while, historically, the Beige Book has not been a significant market moving event, it is worth highlighting that the prior Beige Book was, in fact, followed by some meaningful price action, and that's primarily because it indicated a downshift in outright activity, as reported by the regional anecdotes. Now, in the event that we see a repeat of the uninspired recent Beige Book, it'll be interesting to see how the market chooses to trade that divergence versus the strength that we've seen in the September data.
All else being equal, we expect that the Beige Book will show a modest rebound in the anecdotes, if nothing else. From a trading perspective, while we continue to anticipate lower yield levels by year end and a steeper yield curve, the process of trading the prevailing yield range has become the most prudent approach. In the 2s 10s curve, that range is effectively zero to positive 15 basis points, and in the 10-year sector, with the focal point of 4%, we could see yields back up to 4.15, maybe even 4.25, in the event of a strong bearish impulse, but ultimately, drifting back towards 3.75 will prove the path of least resistance as the year end comes into focus.
We've reached the point in this week's episode where we'd like to offer our sincere thanks and condolences to anyone who has managed to make it this far. And as Halloween quickly approaches, one thing is clear: this year, Vail will be going as a ghost. Thanks for listening to Macro Horizons. Please visit us at bmocm.com/macrohorizons. As we aspire to keep our strategy effort as interactive as possible, we'd love to hear what you thought of today's episode. So please email me directly with any feedback at ian.lyngen@bmo.com. You can listen to this show and subscribe on Apple Podcasts or your favorite podcast provider. This show and resources are supported by our team here at BMO, including the FICC Macro Strategy Group and BMO's marketing team. This show has been produced and edited by Puddle Creative.
Speaker 3:
The views expressed here are those of the participants and not those of BMO Capital Markets, its affiliates, or subsidiaries. For full legal disclosure, visit bmocm.com/macrohorizons/legal.
Approaching 300 - Macro Horizons
Directeur général et chef, Stratégie de taux des titres en dollars US
Ian Lyngen est directeur général et chef, Stratégie de taux des titres en dollars US au sein de l’équipe Stratégie de titre…
Spécialiste en stratégie, taux américains, titres à revenu fixe
Ben Jeffery est spécialiste en stratégie au sein de l’équipe responsable de la stratégie sur les taux américains de BM…
Analyst, U.S. Rates Strategy
Vail Hartman is an analyst on the U.S. Rates Strategy team at BMO Capital Markets. His primary focus is the U.S. Treasury market with specific interests in Federal …
Ian Lyngen est directeur général et chef, Stratégie de taux des titres en dollars US au sein de l’équipe Stratégie de titre…
VOIR LE PROFIL COMPLETBen Jeffery est spécialiste en stratégie au sein de l’équipe responsable de la stratégie sur les taux américains de BM…
VOIR LE PROFIL COMPLETVail Hartman is an analyst on the U.S. Rates Strategy team at BMO Capital Markets. His primary focus is the U.S. Treasury market with specific interests in Federal …
VOIR LE PROFIL COMPLET- Temps de lecture
- Écouter Arrêter
- Agrandir | Réduire le texte
Disponible en anglais seulement
Ian Lyngen and Ben Jeffery bring you their thoughts on the U.S. Rates market for the upcoming week of October 21st, 2024, and respond to questions submitted by listeners and clients.
Follow us on Apple Podcasts, Stitcher and Spotify or your preferred podcast provider.
About Macro Horizons
BMO Strategists discuss the week ahead in the U.S. rates market delivering relevant and insightful commentary to help investors navigate the ever-changing global market landscape.
Ian Lyngen:
This is Macro Horizons, Episode 296: Approaching 300, presented by BMO Capital Markets. I'm your host, Ian Lyngen, here with Ben Jeffery, to bring you our thoughts from the trading desk for the upcoming week of October 21st. And as we can now see our 300th episode approaching on the macro horizon, we cannot help but draw the parallels with the Spartans. They all survived, right? Each week, we offer an updated view on the US Rates market and a bad joke or two, but more importantly, the show is centered on responding directly to questions submitted by listeners and clients. We also end each show with our musings on the week ahead. Please feel free to reach out on Bloomberg or email me at ian.lyngen@bmo.com with questions for future episodes. We value your input and hope to keep the show as interactive as possible. So that being said, let's get started.
In the week just passed, the fundamental updates included a decline in Jobless Claims, which is a net positive for the outlook, as it pertains to the labor market, and a higher than expected Retail Sales print for the month of September. This held true both for headline Retail Sales, as well as for the control group, which has the highest correlation with consumption within the real GDP series. The net takeaway was an upward bias in rates, but one that has occurred within a defined range. And as we look forward, we anticipate that the theme will be one of consolidation, as opposed to a dramatic range break in either direction. The recent Fed rhetoric has, if nothing else, reinforced the notion that the Fed's comfortable shifting to a rate-cutting cadence of 25 basis points per meeting, at least between now and the end of the year, and there's no significant urgency with the pace of rate cuts.
This is very consistent with the messaging from Powell and is also reflected in the higher than 90% probability via market pricing of a rate cut in November. There's also been an uptick in the number of conversations regarding how the Fed might or might not respond to the result of the presidential election. We are of the mind that it certainly won't have an impact on the November decision. And until there's a clear shift in policy, it might not be a consideration until well into 2025. Historically, the Fed has been most comfortable basing policy decisions off of the prevailing known economic data and the trajectory of the real economy, as opposed to any potential shifts on the fiscal side. We struggle to envision that that is going to change anytime soon. We are, however, cognizant that, in the event of a GOP sweep, that many market participants expect that that will either slow the Fed's process of normalization or at least put a floor on terminal to the downside.
So this is also consistent with the general thought that upward pressure on rates will emerge, regardless of who takes the White House and the composition of Congress. We're on board with the notion that the longer end of the curve will cheapen into the end of the year, in the event of a sweep in one direction or another, although we struggle with estimating precisely how much of that is currently priced in. The direction of travel for policy rates is clear and lower, and we do know that there is a change in the White House coming, either to Harris or Trump. We are concerned that this sets the election outcome up to be a classic ‘sell the rumor, buy the fact’ event, i.e., cheapen up the Treasury market into the actual results. Once the results are known, the passing of the event risk, in and of itself, could provide enough incentive to bring in otherwise sidelined buyers.
Such a dynamic has played out several times over the course of this cycle. Originally, when the Fed was hiking rates, the market didn't know when the Fed was going to stop. Once the Fed arrived at terminal and it was clear that policy rates would not be pushed any higher, we saw a wave of buying in the Treasury market. Similarly, once it became obvious that the Fed was going to be in rate cutting mode, we saw a wave of buying that supported Treasuries. We suspect the combination of the emphasis on the election and its eventual resolution will serve as another inflection point that will bring in buying in the Treasury market, thereby capping the degree to which some of the reflationary concerns can push 10 and 30 year yields higher.
Ben Jeffery:
It was a week in the Treasury market where the fundamentals were, frankly, not really in the spotlight. Sure, we got an Initial Jobless Claims print that was a bit stronger than expected and an upside surprise in the Retail Sales Control Group for September. But neither of these data prints held the needed economic weight to really recast the way the Fed is approaching the next meeting or two, or frankly, the market's operating assumption around the forward path of Treasuries and how the interest rate landscape is going to evolve. Instead, one of our biggest takeaways from the week just passed was the price action itself. As the short week began with an extension of the bearishness in Treasuries, only to resolve in dip buying interest and rates that pulled off the highs and while not back to the lows we reached in September, the fact that NFP and CPI have left 10-year yields comfortably below 4.25 demonstrates the bid that continues to keep any sell-off in Treasuries relatively well contained.
Ian Lyngen:
And it's also notable that we have seen breakevens continue to edge a bit higher, and that follows intuitively, given what we have seen play out with the global central banking bias having gone from retaining terminal to a clear concerted effort to lower policy rates, with the exception of the Bank of Japan. We just saw the ECB cut another 25 basis points, as expected, and as we think about the forward path of inflation expectations, we ultimately anticipate that 10-year breakevens won't break above 2.50. But, consolidating between 200 and 240 basis points certainly resonates as we move through in the cycle. This will also contribute to the renewed conversations about the potential for term premium to shift back into positive territory on a sustainable basis. Recall that positive term premium and an upward sloping yield curve tend to go hand-in-hand, although not necessarily. As the Fed moves further along the path of normalization for policy rates, we anticipate that the yield curve will continue to grind steeper.
In the very near term, we continue to expect that the Fed lowers rates by 25 basis points in November, followed by another 25 basis point rate cut in December, and then, shifting to a quarterly cadence in 2025. Now, using that as our base case scenario, we are all too cognizant that the Fed is very much in a data-dependent mode, and as the real economy evolves over the course of the next few quarters, we'll remain on guard for a shift in messaging, as it pertains to the Fed's preferred path of normalization. We find it difficult to envision a scenario in which the Fed simply cuts three times in 2024 and leaves policy rates stable throughout 2025, although we're certainly cognizant that the terminal on the downside debate remains very active.
Ben Jeffery:
And related to all of this and the extent to which the longer end of the curve can see a meaningful return of term premium are the implications of the quickly approaching election, not only from a deficit standpoint, and when it is, coupon auction sizes are going to need to start growing again, but also, from a growth and inflationary perspective and what that means for term premium further out the curve.
Firstly, as it relates to issuance, almost regardless of the outcome of the election in November, both in terms of the White House and the composition of Congress, the earliest we realistically see coupon auction sizes needing to start to climb again is next summer. And frankly, to handicap whether that's the May or August refunding announcement, we'd lean more toward the latter than the former at this stage. Obviously predicting political outcomes and policy agendas that ultimately end up getting passed is well outside our wheelhouse, but at least in the near term, it seems that the conversation around larger auction sizes and the potential for an imminent re-ramp-up of supply in the longer end of the curve is unlikely. And instead, that's going to be a second half of 2025 issue.
However, that doesn't preclude the growth and inflationary implications of either a Republican or Democratic sweep from stoking reflationary concerns pushing breakevens wider and adding a government spending driven boost to growth assumptions over the next few years. We'll argue that the biggest difference, in terms of the market's reaction around the election, is not between whether it's all red or all blue, but rather if it's a sweep by either party or a split government. It's the split government scenario that likely means more difficulty in passing any grand initiatives, and that ultimately will keep the economic impact of the election comparatively muted.
Ian Lyngen:
And within this context, I think it's notable that we have not really seen the polls influence the direction of yields, nor some of the higher profile appearances of either candidate. It seems as though the market, at least for the time being, is content to wait until we have clarification following the election, before investors are comfortable positioning for any potential future changes. That being said, there is a general consensus that, regardless of who takes the White House, that there will be an increase in deficit spending. As a slight offset to that, the Fed's forward path of policy rates will be lower and the Treasury Department is borrowing heavy in the bill market, which means that as front-end yields start to decline, the interest expense component of the deficit spending will be biased slightly lower.
Now, while this certainly isn't going to be significant enough to reframe the conversation around deficit spending, when combined with a strong performance of the real economy, i.e., higher tax receipts, we might see a de-emphasis of the deficit story, as 2025 unfolds. It's also worth considering that, in the event that there's not a sweep, either to the GOP or the Democrats, that the middle of next year, as the debt ceiling issue becomes topical once again and the government is unable to agree on a budget, we could see the potential for another government shutdown, conversations about a delayed payment, et cetera. At this point, it's a very well-traveled path, but nonetheless, something worth keeping on the radar, as we ponder the year ahead.
Ben Jeffery:
And in a market environment with all these moving pieces and no shortage of uncertainty, there is one dynamic that is seemingly very consistent, and that is the continued resilience of risk assets, with equities continuing to make all-time highs, despite monetary policy that's still in restrictive territory, but now, becoming less so. We frequently discuss the implications from stocks that only seem to go up, both in terms of the wealth effect, with what that means for consumer confidence, so willingness to spend, but also, the overall level of financial conditions, as diminished equity volatility and real rates, that have come well off their peaks, continue to be the cornerstones of a financial conditions landscape that is still very easy.
Obviously, the Fed is well aware of this dynamic, and so, despite the 50-BP cut we got last month, the fact that, going forward, the operating assumption is that future moves will be of the 25 basis point variety, it's not wasted on us that even with financial conditions so easy and equities at the highs, the Fed's bias is to continue to bring rates lower. And so, in that context, it's difficult for us at least to make the bear case for domestic stocks.
Ian Lyngen:
And as we watch the market continue to consolidate in a very clear and defined range, one clear theme has emerged, and that is that investors are very much in a “wait and see” stance at the moment. We all have our operating assumptions about the pace of Fed rate cuts and will concede that, to some degree at least, the Fed's path to normalization will undoubtedly be data dependent. In practical terms, however, that means that investors need to see each incremental data point before either solidifying or undermining one's core assumption about each incremental move. Said differently, we are clearly in an environment where the Fed is data dependent, the market is data dependent, and the outlook is data dependent, and so, investors are appropriately content to play the extremes of the range, as we wait and see.
Ben Jeffery:
So where are 10-year yields going? I think we got our answer. It depends.
Ian Lyngen:
If nothing else, we're in a mode that we're doing a lot more waiting than we are seeing. In the week ahead, the Treasury market will have remarkably little in terms of fundamentals from which to derive trading direction. We do have the $13billion 20-year auction on Wednesday, followed by a $24 billion five-year TIPS auction on Thursday. Economic data is limited to Existing Homes on Wednesday, New Homes on Thursday, and of course, the weekly Jobless Claims update. Claims will be less relevant in the week ahead, because Nonfarm Payroll survey week has already passed. Now, this doesn't mean that the market is poised for a particularly strong October payrolls print, rather that, as we make it all the way through the September data cycle, the data theme for October in particular will be one of uncertainty, because of the impact of the hurricanes on the real economy.
Now, that comes in the form of consumption, as well as inflation, and of course, hiring. The challenge for monetary policymakers will quickly become that they'll be flying effectively blind into the next couple meetings, in the event that we have any meaningful degree of distortion in the realized data. Now, while we don't expect that this will prevent the Fed from cutting rates per se, it does go without saying that another half point cut is off the table, at least for the time being. We also have the midweek release of the Beige Book. Now, while, historically, the Beige Book has not been a significant market moving event, it is worth highlighting that the prior Beige Book was, in fact, followed by some meaningful price action, and that's primarily because it indicated a downshift in outright activity, as reported by the regional anecdotes. Now, in the event that we see a repeat of the uninspired recent Beige Book, it'll be interesting to see how the market chooses to trade that divergence versus the strength that we've seen in the September data.
All else being equal, we expect that the Beige Book will show a modest rebound in the anecdotes, if nothing else. From a trading perspective, while we continue to anticipate lower yield levels by year end and a steeper yield curve, the process of trading the prevailing yield range has become the most prudent approach. In the 2s 10s curve, that range is effectively zero to positive 15 basis points, and in the 10-year sector, with the focal point of 4%, we could see yields back up to 4.15, maybe even 4.25, in the event of a strong bearish impulse, but ultimately, drifting back towards 3.75 will prove the path of least resistance as the year end comes into focus.
We've reached the point in this week's episode where we'd like to offer our sincere thanks and condolences to anyone who has managed to make it this far. And as Halloween quickly approaches, one thing is clear: this year, Vail will be going as a ghost. Thanks for listening to Macro Horizons. Please visit us at bmocm.com/macrohorizons. As we aspire to keep our strategy effort as interactive as possible, we'd love to hear what you thought of today's episode. So please email me directly with any feedback at ian.lyngen@bmo.com. You can listen to this show and subscribe on Apple Podcasts or your favorite podcast provider. This show and resources are supported by our team here at BMO, including the FICC Macro Strategy Group and BMO's marketing team. This show has been produced and edited by Puddle Creative.
Speaker 3:
The views expressed here are those of the participants and not those of BMO Capital Markets, its affiliates, or subsidiaries. For full legal disclosure, visit bmocm.com/macrohorizons/legal.
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Risque climatique : changements réglementaires à surveiller en 2024
Comment la NASA et IBM utilisent les données géospatiales et l’intelligence artificielle pour analyser les risques climatiques
L’obligation de publier de l’information sur les facteurs ESG est le signe d’un marché arrivé à maturité
BMO organise un financement vert pour financer le nouveau Lawson Centre for Sustainability, la construction la plus importante de Trinity College depuis un siècle
BMO se classe parmi les sociétés les plus durables d'Amérique du Nord selon les indices de durabilité Dow Jones
Le Canada a l’occasion de devenir un chef de file mondial de l’élimination du dioxyde de carbone
Selon un sondage réalisé par l'Institut pour le climat de BMO auprès des chefs d'entreprise, près de la moitié des chefs d'entreprise des États-Unis et du Canada croient que les changements climatique
Un plus grand nombre d’entreprises ont des plans pour lutter contre les changements climatiques en raison de l’importance croissante qu’ils revêtent sur leurs activités : Résultats du sondage
L’électrification constitue une occasion unique dans le cadre de la transition énergétique
Questions et réponses : comment transformer les défis économiques en possibilités
Le soutien du secteur de l’énergie dans l’atteinte des objectifs de décarbonisation du Canada
Trois idées inspirées de la Semaine du climat pour passer à l’action à la COP28
Pourquoi les entreprises doivent accélérer leurs efforts pour lutter contre les changements climatiques
Du caractère essentiel du financement pour doper les technologies d’élimination du carbone
Transformer le système alimentaire mondial au bénéfice des investisseurs et de la planète
Banco do Brasil and BMO Financial Group to Introduce First-of-its-Kind Program to Provide Sustainability-Linked Trade Loans Supporting Brazilian Exporters
BMO Donates $3 Million to GRID Alternatives to Provide Solar Energy Solutions for Low-Income Families
Comment les investissements dans le captage du carbone peuvent générer des crédits carbone
BMO fournit un nouveau produit innovant, le dépôt lié à la durabilité, à Zurn Elkay Water Solutions
Quick Listen: Michael Torrance on Empowering Your Organization to Operationalize Sustainability
BMO seule grande banque nommée au palmarès des 50 meilleures entreprises citoyennes au Canada
Un investissement rentable : la rénovation comme moyen d’atteindre la carboneutralité
Évolution du marché du carbone : ce qu’en pensent les principaux acteurs
BMO et Bell Canada mettent en œuvre un produit dérivé innovant lié à la durabilité et à des objectifs ambitieux de réduction des émissions de gaz à effet de serre
Réduction du gaspillage alimentaire : solutions, occasions et retombées
J’attends avec impatience notre 18e Conférence annuelle sur les marchés agricoles
BMO fait partie d'un groupe convoqué par l'ONU qui conseille les banques mondiales sur l'établissement d'objectifs liés à la nature
Les chefs de file de l’investissement intensifient leurs efforts en vue d’atteindre l’objectif net zéro
Favoriser les innovations technologiques pour renforcer la résilience face aux changements climatiques
BMO célèbre le Jour de la Terre avec la 3e édition annuelle du programme Des transactions qui font pousser des arbres dans ses salles des marchés mondiaux
BMO Donates $2 Million to the University of Saskatchewan to Accelerate Research Critical to the Future of Food
L’infrastructure est la clé d’un marché compétitif en Amérique du Nord – Sommet États-Unis–Canada
Le temps presse pour les solutions au changement climatique - Sommet Canada-États-Unis
North America’s Critical Minerals Advantage: Deep Dive on Community Engagement
Réchauffement climatique : le GIEC lance son dernier avertissement de la décennie
Les légendes du roc réfléchissent aux réussites et aux échecs de l’industrie minière lors de la Conférence mondiale sur les mines, métaux et minéraux critiques
Exploration des avantages de l’extraction de minéraux critiques en Amérique du Nord dans le cadre de la Conférence mondiale sur les mines, métaux et minéraux critiques
La confiance est la denrée la plus précieuse : Message de l’ICMM à la Conférence mondiale sur les mines, métaux et minéraux critiques de BMO
Explorer les risques et les possibilités associés aux notations ESG dans le secteur minier
BMO Experts at our 32nd Global Metals, Mining & Critical Minerals Conference
Evolving Mining for a Sustainable Energy Transition: ICMM CEO Rohitesh Dhawan in Conversation
BMO Equity Research on BMO Radicle and the World of Carbon Credits
BMO tiendra sa 32e conférence mondiale sur le secteur des mines, des métaux et des minéraux essentiels
Public Policy and the Energy Transition: Howard Learner in Conversation
Taskforce on Nature-Related Financial Disclosure (TNFD) – A Plan for Integrating Nature into Business
Points à retenir du sondage sur le climat des petites et moyennes entreprises réalisé par l’Institut pour le climat de BMO
BMO nommée banque la plus durable d'Amérique du Nord par Corporate Knights pour la quatrième année d'affilée
Le financement vert du nucléaire : nouvelle frontière de la transition énergétique?
Assurer l’avenir des approvisionnements alimentaires : le rôle de l’Amérique du Nord
BMO s'est classé parmi les entreprises les plus durables en Amérique du Nord selon les indices de durabilité Dow Jones
Un sondage de l'Institut pour le climat de BMO révèle que les coûts et les priorités concurrentes ralentissent l'action climatique des petites et moyennes entreprises
Gérer et monétiser votre transition vers un monde carboneutre avec BMO et Radicle
BMO est l'institution financière la mieux classée selon le Global Sustainability Benchmark, le nouvel indice de référence mondial du développement durable annoncé lors de la COP 27
COP27 : Les problèmes de sécurité énergétique et l’incertitude économique ralentiront-t-ils la transition climatique?
BMO investira dans les crédits compensatoires de carbone novateurs de CarbonCure pour stocker du CO₂ de façon permanente
Financement commercial : vers le développement durable, une entreprise à la fois
RoadMap Project: An Indigenous-led Paradigm Shift for Economic Reconciliation
Une première canadienne : BMO et l'Université Concordia s'unissent pour un avenir durable grâce à un prêt innovant lié à la durabilité
Intégration des facteurs ESG dans les petites et moyennes entreprises : Conférence de Montréal
BMO entend racheter Radicle Group Inc., un chef de file des services environnementaux situé à Calgary
Investment Opportunities for a Net-Zero Economy: A Conversation at the Milken Institute Global Conference
S’ajuster face aux changements climatiques : l’Institut pour le climat de BMO
How Hope, Grit, and a Hospital Network Saved Maverix Private Capital Founder John Ruffolo
Hydrogen’s Role in the Energy Transition: Matt Fairley in Conversation
Key Takeaways on Ag, Food, Fertilizer & ESG from BMO’s Farm to Market Conference
Les risques physiques et liés à la transition auxquels font face l’alimentation et l’agriculture
Agriculture de pointe : réduire les impacts environnementaux en même temps que les coûts
Building an ESG Business Case in the Food Sector: The Food Institute
J’attends avec impatience notre 17e Conférence annuelle sur les marchés agricoles
Les prix des métaux encore loin d’une nouvelle normalité : Table ronde de BMO sur les mines
Aller de l’avant en matière de transition énergétique : Darryl White s’adresse aux gestionnaires de réserves et d’actifs mondiaux
BMO et EDC annoncent une collaboration pour présenter des solutions de financement durable aux entreprises canadiennes
Refonte au Canada pour un monde carboneutre : Conversation avec Corey Diamond d’Efficacité énergétique Canada
The Role of Hydrogen in the Energy Transition: FuelCell Energy CEO Jason Few in Conversation
BMO est fier de soutenir la première transaction d'obligations vertes du gouvernement du Canada en tant que cochef de file
Article d’opinion: Le Canada peut être un leader en matière de sécurité énergétique
Les mesures prises par le gouvernement peuvent contribuer à stimuler la construction domiciliaire afin de remédier à la pénurie de logements au Canada
Tackling Climate Change in Metals and Mining: ICMM CEO Rohitesh Dhawan in Conversation
La circulaire de sollicitation de procurations et les rapports sur la durabilité 2021 de BMO sont maintenant disponibles
Why Changing Behaviour is Key to a Low Carbon Future – Dan Barclay
BMO lance le programme Services aux entreprises à portée de main - BMO pour les entrepreneurs noirs et annonce un engagement de 100 millions de dollars en prêts pour aider les entrepreneurs noirs à dé
The Post 2020 Biodiversity Framework – A Discussion with Basile Van Havre
BMO annonce son intention de se joindre au programme Catalyst de Breakthrough Energy pour accélérer l'innovation climatique
BMO Groupe financier nommé banque la plus durable en Amérique du Nord pour la troisième année d'affilée
Using Geospatial Big Data for Climate, Finance and Sustainability
Atténuer les répercussions des changements climatiques sur les actifs physiques par la finance spatiale
BMO aide Boralex à aller Au-delà des énergies renouvelables en transformant sa facilité de crédit en un prêt lié au développement durable
Première mondiale : BMO soutient Bruce Power avec le premier cadre de financement vert du secteur nucléaire au monde
BMO se classe parmi les entreprises les plus durables au monde, selon les indices de durabilité Dow Jones
COP26 : Pourquoi les entreprises doivent assumer leur responsabilité sociale
The Future of Remote Work and Diversity in the Asset Management Industry
Changer les comportements est essentiel pour assurer un avenir à faible émission de carbone – Table ronde Milken
BMO aide Teck Resources à progresser vers ses objectifs ESG avec un prêt lié à la durabilité
Première dans le secteur des métaux et des mines en Amérique du Nord : BMO aide Sandstorm Gold Royalties à atteindre ses objectifs ESG grâce à un prêt lié à la durabilité
Éducation, emploi et autonomie économique : BMO publie Wîcihitowin ᐑᒋᐦᐃᑐᐏᐣ, son premier Rapport sur les partenariats et les progrès en matière autochtone annuel
BMO annonce un engagement de financement de 12 milliards de dollars pour le logement abordable au Canada
In support of Canada’s bid to host the headquarters of the International Sustainability Standards Board
Investing in Real Estate Sustainability with Bright Power Inc.
BMO appuie la candidature du Canada pour accueillir le siège du Conseil des normes internationales d'information sur la durabilité
BMO nommé au classement des 50 meilleures entreprises citoyennes au Canada de Corporate Knights
ESG From Farm to Fork: Doing Well by Doing Good
Banques centrales, changements climatiques et leadership : Forum annuel destiné aux femmes œuvrant dans le secteur des titres à revenu fixe, devises et produits de base
BMO met sur pied une nouvelle équipe innovatrice pour la transition énergétique
L’appétit croissant pour l’investissement dans un but précis dans les valeurs à revenu fixe par Magali Gable
BMO organise le congrès annuel mondial sur les marchés agricoles pour une 16e année consécutive
Première nord-américaine : BMO aide Gibson Energy à transformer entièrement une facilité de crédit en un prêt lié à la durabilité
Le programme Des transactions qui font pousser des arbres permettra d’en planter 100 000
Les arbres issus des métiers bénéficient d'un marché obligataire ESG solide
Understanding Biodiversity Management: Best Practices and Innovation
The Changing Face of Sustainability: tentree for a Greener Planet
La 30e conférence mondiale annuelle sur le secteur des mines et des métaux de BMO est en cours
Favoriser des résultats durables : le premier prêt vert offert au Canada
Episode 29: What 20 Years of ESG Engagement Can Teach Us About the Future
Rapport sur les perspectives de 2021 de BMO Gestion mondiale d'actifs : des jours meilleurs à venir
Episode 28: Bloomberg: Enhancing ESG Disclosure through Data-Driven Solutions
Comment Repérer L’écoblanchiment Et Trouver Un Partenaire Qui Vous Convient
BMO se classe parmi les entreprises les plus durables selon l'indice de durabilité Dow Jones - Amérique du Nord
Episode 27: Preventing The Antimicrobial Resistance Health Crisis
BMO investit dans un avenir durable grâce à un don d’un million de dollars à l’Institute for Sustainable Finance
BMO Groupe financier franchit une étape clé en faisant correspondre 100 pour cent de sa consommation d'électricité avec des énergies renouvelables
BMO Groupe financier reconnu comme l'une des sociétés les mieux gérées de manière durable au monde dans le nouveau classement du Wall Street Journal
Episode 23: TC Transcontinental – A Market Leader in Sustainable Packaging
Les possibilités de placement durables dans le monde d’après la pandémie
BMO Capital Markets to host 2020 Prescriptions for Success Healthcare Virtual Conference
Les sociétés axées sur l’efficacité énergétique peuvent maintenant réduire leurs coûts d’emprunt
BMO Groupe financier s'approvisionnera à 100 pour cent en électricité à partir d'énergies renouvelables
Episode 13: Faire face à la COVID-19 en optant pour des solutions financières durables
Épisode 09 : Le pouvoir de la collaboration en matière d'investissement ESG
Épisode 08 : La tarification des risques climatiques, avec Bob Litterman
Épisode 07 : Mobiliser les marchés des capitaux en faveur d’une finance durable
Épisode 06 : L’investissement responsable – Tendances et pratiques exemplaires canadiennes
Épisode 04 : Divulgation de renseignements relatifs à la durabilité : Utiliser le modèle de SASB
Épisode 03 : Taxonomie verte: le plan d'action pour un financement durable de l'UE
Épisode 02 : Analyser les risques climatiques pour les marchés financiers