Welcome to 2025 - Views from the North

Ben Reitzes:

Welcome to Views from the North, a Canadian rates and macro podcast. This week I'm joined by Andrew Wallace, one of our Government of Canada Bond traders. This week's episode is titled Welcome to 2025. I'm Ben Reitzes and you're listening to Views from the North. Each episode I'll be joined by members of BMO's FICC, sales and trading team 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.

Andrew, happy new year. Thank you for coming on the show. It's your first time. I've been trying to wait for a special moment to bring you on, and I guess the first show of 2025 is just that.

Andrew Wallace:

Yeah. No, thank you. Thank you for having me, Ben. Happy New year to you, too, and to all our listeners, which you've built up a pretty good base of, I think. So hope everyone had a good holiday break and then 2025 is off to a good start.

Ben Reitzes:

I mean, I didn't have the best holiday break, but thank you. I'm not a staycation person and I already knew that, and now I've just learned it again. But that's okay. I'm going away in Feb, so I'll be much happier then. 2025, so I think we knew it would be kind of an eventful year coming in. You have Trump starting off very shortly. We knew there'd be a Canadian election at some point, maybe not as soon as it looks like it's going to come and not with the amount of drama that we've seen thus far. And the market also has been very challenging, let's say, through the first... I don't know, it's January 8th.

Andrew Wallace:

Kind of a continuation from late '24. So, yeah.

Ben Reitzes:

Exactly, and so it has been interesting so far. I guess what are your highlights going to be for 2025? What are you going to watch most closely? Is it politics? Is it going to be the data? Central Bank's going to be the big story. I kind of doubt it, but you never know. Or is it just more just market related, where rates are, issuance, all that kind of stuff?

Andrew Wallace:

Yeah, it's interesting. So I guess looking back at last year, we were talking about this on the desk the other day, It was a really active and busy year in '24, and you forget that central banks only became active halfway through. Yes, you had upcoming elections and some debates and everything around that, but that hadn't happened yet, and yet there was all this activity and volatility throughout last year. And then you look ahead to what's near term this year and you just have way more on the plate. You have all this Trump's inauguration coming up, as you mentioned, Canada's election, and that goes along with the usual issuance, supply dynamics, how that changes with new governments and new fiscal years for the provinces, which come pretty soon as well. So a lot on the plate in terms of what kind of looking at and focused on. From our spot, we try to focus on the stuff we can control and try not to-

Ben Reitzes:

So not a lot then.

Andrew Wallace:

Yeah, exactly. So most of the questions we're fielding, especially lately with what's going on with Trudeau's resignation and everything is around the political landscape in Canada. The way we look at it, you skew towards thinking, "Okay, a conservative government is going to take shape in the spring. What's that going to look like?" Seems like more fiscal responsibility, less issuance over a period of time. That's longer term, of course. That doesn't change the dynamic over the next couple months. And then we really have to weigh what the likelihood of some of Trump's threats and talks or what he's saying are going to be on the Canadian market. And we'll get into that a lot, I'm sure, when we start talking about Canada, US spread, which is, outside of the politics, the most topical thing we've been discussing with clients lately.

So I think near term, we're focused on the political landscape and how that's affecting things. Tough to really trade necessarily based on that because we just don't know how it's going to play out near term. So from a day-to-day basis, really, issuance becomes very important. We can get into that. We've had a pretty active start to the year in certain facets with issuance. That'll be a big dynamic. Bond auctions, we had a two-year today, 10 year tomorrow. So I'd say probably our focus is more on that immediate while we're trying to consider the likelihood of certain outcomes with the politics and how that will affect the curve and spread.

Ben Reitzes:

So just to be clear, Andrew's our front end, not quite front end, but out to the belly Government of Canada trader. So that's where his focus is, but he does look at the whole curve. Looking at the market over the past week, and I guess it's really over the past number of months, we've seen a consistent sell-off in treasuries and, if you look overseas, the gilt market has just gotten absolutely destroyed.

Andrew Wallace:

Yep. Yep.

Ben Reitzes:

And I don't know where that ends. Maybe it ends today, maybe it ends tomorrow, maybe it ends the next day. I don't really know. But Canada really has not joined in on that, and that's driven Canada to extremely rich cross-market levels. And I guess what in your mind differentiates Canada from everybody else? Why haven't we followed the trend we've seen elsewhere? I mean, we have sold off, but just not nearly as much. What's driven that Canada out-performance?

Andrew Wallace:

Yeah, so I think there's a few things at play. The major dynamics, of late anyway, being I think the consideration of possible significant tariffs on our economy and what that looks like. So perhaps there's consideration. If there was some consideration that the bank was getting closer to neutral, maybe they're not. Maybe if the impact is significant, rates do need to go lower, in which case if the fed's on pause and UK keeps selling off, really, that cross-market spread under that dynamic obviously continues to richen, or at least doesn't cheapen back near term. I think that's a big one.

Second one with the general sell-off in yields, and this is more US and UK related, as you said, we do see better buy-in in the cash base. Domestic accounts, real money accounts for a multitude of reasons with yields around here, 340-ish and longs. They are better buyers around here. Even though you could argue we look rich on a relative basis, for whatever metrics they're looking at, it is attractive around these levels. So we have had some buy-in where it doesn't seem like other markets are really seen as much, the US in particular, as that's really driving the spread.

Ben Reitzes:

Is it more that they just have so much more supply? Maybe they also see the same relative amount of buying, but the relative amount of supply is so much bigger that it's just like, "Well-"

Andrew Wallace:

And that gets to the next point of what's rich in this, is we just haven't had a lot of issuance, right? We go into December, we get the index extension, we get natural buy-in from that. The provinces were well ahead in their funding programs. They were pretty quiet. Corporate issuers basically shut it down from early December to January, so there just hasn't been that supply. Now we're getting some supply in GOCs this week with 2s and 10s, but we just don't get a lot of long bond auctions. We don't get a lot of longs in Canada. Another point may be under a different government that changes and they term out some of the debt. I don't know. But yeah, there just hasn't been a supply, which is another reason I think that Canada has failed to really track the move cheaper, especially further out the curve that we've seen in other markets is kind of those dynamics and supply being a big one, too, for sure.

Ben Reitzes:

We get the 10-year auction on Thursday. It's currently Wednesday afternoon, so tomorrow currently. But when this comes out, the auction will be coming up shortly. 10s have cheapened a lot on the curve. Like 5s10s30s have cheapened up a ton after having a nice little run for a small period in the fourth quarter.

Andrew Wallace:

Yeah. Fly, I think, closed 18 and half-ish today.

Ben Reitzes:

Something in that ballpark. I mean, we're close to the top of the range we've seen over the past number of years. The auction size is bigger, so it's up to six billion from five billion. That's a number that's kind of been consistently rising over the past few years. Do you think that fly continues to cheapen here? Are we going to keep going, or is this a good opportunity to get into a low beta market long?

Andrew Wallace:

Yeah, so that's what it is. I mean, I think the first thing to acknowledge is definitely that. It's low beta market long. So if you are of the belief that, generally speaking, global bond markets have sold off a little bit too much, probably looks like a decent trade. I think lagging into it here makes sense. I guess, yeah, supply is the reason why. Really, I think, the piece of it that is arguably a little bit cheap near term is the 5s10s component. I don't know if 10s30s really steepens meaningfully near term. Now that's partly due to the issuance piece is we've got some supply this week, not much of it in the long end. You saw Ontario go to the U.S. market with three billion U.S. dollar, five years. That's a lot of supply they're getting in. They're already ahead in their funding programs. Yes, they still have something to do with the provinces, but it's not a significant amount.

So if yields stay up around here, I think you get a bit of continued buy-in of longs, which we discussed. That probably prohibits, to an extent, a little bit of near-term cheapening of 10s30s, but 5s10s I'd argue is a little bit cheap and is sold off too much. So I think lagging into it here makes sense. I wouldn't be surprised if it's a little bit stubborn and it doesn't quite perform like we've seen in the past where it gets to around this level and it has richened back pretty swiftly. I could see it trading around here, but I think around here, 18 and a half, 20-ish, I think you start lagging in. I think it's a good trade.

Ben Reitzes:

I'm going to challenge you a bit.

Andrew Wallace:

Okay.

Ben Reitzes:

So 5s10s versus 10s30s. So I guess 5s10s flattening could work in this environment.

Andrew Wallace:

Yep.

Ben Reitzes:

You think 5s should probably cheapen up on the curve?

Andrew Wallace:

More medium to longer term I do not like 5s.

Ben Reitzes:

Okay.

Andrew Wallace:

So we can get into the reasons behind that. I'm sure we will.

Ben Reitzes:

Okay. Go ahead, go ahead.

Andrew Wallace:

So 5s, do we want to get in a bit of the backstory of-

Ben Reitzes:

Sure.

Andrew Wallace:

Yeah.

Ben Reitzes:

I mean, we've put it out there a few times, but it's worth mentioning again because it is a potential meaningful market factor for this year, and knowing how things are going to evolve on the housing front, on the deposit front is really challenging. I think maybe more so now than ever, but it is definitely worth mentioning.

Andrew Wallace:

Yeah, so 5s have cheapened a lot. 2s5s10s fly, 2s fly has obviously a steepened a lot the last little bit just with general pressure and yields and steepening and curves. I've talked about a lot, most of your listeners and readers would know, 5s were extremely rich for a while just from deposit, hedging, and a lack of mortgage origination in the five-year space. We looked at some of the charts today, you and I. It seems from some of that and from some of what we're seeing from the bank ALM community that some of the deposit hedging has slowed. As you say, tough to say what that's going to look like over the near to medium term, but it is slow. We're seeing less receiving a five-year to hedge that five-year deposit duration.

At the same time, we've seen less persistent paying a two-year and three-year to hedge shorter term fixings in the mortgage market. So that 2s5s structural flattening trade, it hasn't unwound, but it just hasn't been as consistent as we've seen. I think 5s are still, although they've cheapened, they're still relatively rich on that fly, that 2s5s10s fly. And I think that if you do get some sort of reversal in that, and if you do get a little bit of five-year fixings renewals coming up from 2020 in the spring throughout the year, I think that 5s come under a little bit of pressure on the curve on a relative basis. That's why you don't mind 5s10s here, especially if you're a little bit bullish on duration, generally, after the sell-off.

So I'm looking for ways to play short 5s throughout the near to medium term as a structural trade this year, whether it's the 2s5s10s fly, trying to get shorted on any meaningful richening. And then also when we talk about cross-market, if you do like being short cross-market, Canada, U.S., I have it on right now in five year just because I find the 5s a little bit rich, and I think that's my point pick.

Ben Reitzes:

Okay. I suspect that the mortgage side of things is going to play a pretty big role. The mortgage curve right now suggests to me, at least, people are more likely to take a three year than a five-year. It's like 20 plus-ish cheaper, more or less, to take a three-year.

Andrew Wallace:

And how about a four-year?

Ben Reitzes:

It actually goes up in a four-year.

Andrew Wallace:

Okay.

Ben Reitzes:

Banks don't want you to take a four-year mortgage for a reason I don't entirely understand. So the shape of that curve and just the outright level of rate, because we've had the sell-off in rates, if anything, there might be upward pressure on mortgage rates in the very near term. I doubt that they'll go up because they didn't really come all the way down with the rally, so I don't think we'll feel the full sell-off either. But either way, the level itself, like the 425, 450-ish in five-year mortgage just is not low enough, I think, to really spark a huge rebound in that specific sector. Some of that-

Andrew Wallace:

Here's a question, too, and I don't know the answer to it, and maybe you have a better understanding or idea on it, but someone who took out a five-year fixed mortgage in 2020, how likely are they to change to a two or three-year fix versus them being comfortable with a five-year fix and just saying, even though my rate is significantly different, I know a five-year fixed mortgage, I'm going to take that out versus run through the analysis, that initial home buyer probably would more scrutiny.

Ben Reitzes:

So there's two ways to think about this. So one, it depends on who's selling it to them. If there's a salesperson attached to this, they are probably... Whatever that salesperson pitches is probably the most likely to go. Canadian financial literacy is not amazing, and so if someone can provide a convincing argument to log in for a while, that might work, but I think historically, it's whatever is the lowest number is the one-

Andrew Wallace:

I know the answer to that, so that's why I was kind asking. So people that had five-year mortgages will come in and look. They'll think three-year fixing looks better.

Ben Reitzes:

Correct.

Andrew Wallace:

Yeah.

Ben Reitzes:

It's like this is 25 basis points cheaper. Done. There might be a little bit of fear about higher rates, but I think rates are kind of high as it is at this point, and until it becomes clear-

Andrew Wallace:

But when you argue now with the bank being well underway in a cutting cycle, the narrative has definitely shifted to where people now think if you were to pull someone who's not in financial markets on the street, where are interest rates going? They probably think now lower.

Ben Reitzes:

Yes, yes. So that was going to be my next point, is until it becomes clear that they're not cutting anymore, when that day comes, then there might be a lot more appetite to move further out the curve because it's like, "Oh, these might actually be the lowest mortgage rates wherever we are at that time." Could be here, could be lower, could be high, could be higher for all I know, and people might just be a little bit more willing to step further out just because they know that rates are going higher and they don't want to be exposed to any kind of risk because Canadians do tend to be risk averse fundamentally, especially on the mortgage front, I think. So, I mean, we'll see where things go. I'm still cautiously optimistic on housing. We'll get home sales numbers next week, and Toronto we got this week. They look pretty bad. It's down 15% or so, which kind of puts a bit of a dent in my story.

Andrew Wallace:

Yeah, a little bit of ahead of faith there late last year.

Ben Reitzes:

We'll see. Hold on, hold on. Vancouver also kind of softish, but the rest of the country looked pretty good. So I think what's interesting, and this works with what I've been thinking about is the mortgage rules changed on December 15th and it made it much easier to buy a house than a million to a million and a half dollar range. And you see a meaningful pickup in some different areas, like Montreal was up 50% year over year or something like that.

Andrew Wallace:

Yep.

Ben Reitzes:

And they've been kind of in that range for a while now, but sales didn't pull back the way they did in Toronto or Vancouver. It tells you maybe that mortgage rule change did have an impact and you'll see potentially continued strength in the coming months. The higher priced areas, again, Toronto, Vancouver, still more challenging. Rents are starting to pull back. The renters are more than aware of the change in population dynamics, and so they're more than happy to wait and not just snap up any place they can for fear of having to pay more six months from now.

And I've even heard stories of people asking for their landlords to cut their rent, and the landlord said yes, which is mind-boggling almost. And so that change in dynamic tells me that Toronto's probably still got some correction to go, either prices need to go down or rates need to go down, or rents need to go up, and rents are going down, then everything has got to go down. So it is pretty challenging. And so that's why the housing picture is as muddled for me as it is. I am still cautiously optimistic, but rates probably need to fall a little bit further, which may not happen, but we'll see.

Andrew Wallace:

Yeah. So I guess general direction rates in Canada, and let's get your thoughts.

Ben Reitzes:

That was my next-

Andrew Wallace:

Yeah, okay. So then we can start talking about some front end cross market pricing and that, but what are some of your thoughts on upcoming data? What's going to influence the bank, how you're looking at it versus market pricing? Because I think I have some similar views as you when it comes to some of this, but why don't you let the listeners-

Ben Reitzes:

It's been a few weeks. It's been a few weeks, so we'll find out. Well, after this broader sell-off here, I'm kind of inclined to say we're due for a bit of rally, maybe U.S. 10s got to get to five percent first, but I have trouble believing risk markets generally can withstand a material further sell-off in real rates. So I don't think we're that far, but too many people... I've had this conversation with too many people for me to think we're there today. It just feels like it's got to go further and hurt more people before we get there.

And so if rates can pull back a bit from these levels, we probably still underperform the U.S. on any kind of rally. So that's further out the curve. With respect to the bank, still 25 in January. We need it and the fact that the housing numbers pulled back a bit should put a little bit of cold water on fears that housing's going to be out of control and just take off. So that's, I guess, positive from that perspective.

Beyond January, given where the currency is for me, I mean, I'll bring tariffs in a second, but absent that, I think they just have to match the Fed. If they are more aggressive than the Fed, we're at 144-ish now in the currency. We'll probably be three to five cents higher if they signal they're willing to continue to go without the Fed. And that, I think, is problematic from a lot of different perspectives. There is some inflation passing over time, I think, on the model I have that I haven't opened in three weeks, but I think it suggests that core inflation will be about three-tenths higher in the back half of the year due to the currency so far. And that probably will move further. I don't think I had the full impact for the fourth quarter in yet.

So there's a few ticks there, and if it keeps going, that's just going to push even further. And so it takes time for that to unfold. But the bank definitely knows that. It's a question of how the data unfolds and whether this GST cut or whatever, GST holiday has the impact that they hope it will and boost the economy. I mean, I don't think I've spent any more money, but I like it.

Andrew Wallace:

This is where, I mean, I haven't got the evidence yet and maybe we'll lay out the timeline of where the data looks and when we'll start getting an indication of that. But in talking to friends and family, it seems anyway that it's having a material impact. You talk with people and they are pumped that they can go and save this percentage and they're going and stocking up on stuff and I was-

Ben Reitzes:

What stuff are they stocking? There's nothing you can stock up on.

Andrew Wallace:

Household items.

Ben Reitzes:

Children's clothing?

Andrew Wallace:

I mean, I don't shop at the same wine rack as you do, at the liquor store, but the one I was shopping at was pretty bare the other day when I went in.

Ben Reitzes:

Yes. LCBO has nothing.

Andrew Wallace:

Exactly.

Ben Reitzes:

Which is actually ridiculous.

Andrew Wallace:

I guess the evidence I've seen on the street is suggestive that people are spending money now. I don't do a whole lot of shopping generally, so it being the holiday period, perhaps it's some of that, that I just don't really remember what it's like around this time of year. But in talking to some friends and family, it does feel like people are spending money and some of which is a result of-

Ben Reitzes:

Yeah, that's fair. One day I went to the store, it was early and I think I had my kid at a hockey game and I had an hour to kill before the game started because he likes to get there early. And so I'd go to the LCBO and I'd go look for wine and I just stare at it and then I leave. I bought one bottle. The lineup was 40 people deep and there were people with shopping carts filled, and I was just like, "I didn't plan for this." It took me too long to pick the one I wanted and then I was like 10 minutes late for the game. That was early in the process. But that is consistent with your anecdote, so clearly it did have some impact.

Andrew Wallace:

Yeah. So the spending and when we'll get a little bit of a feedback on what that has looked like isn't until February.

Ben Reitzes:

The earliest. Yeah, you'll start to get some December numbers, and even then that's only half a month. Jan's the full month.

Andrew Wallace:

So you do have some tops, but the bank won't have anything in their pocket with respect to that until at least-

Ben Reitzes:

April meeting.

Andrew Wallace:

Yeah.

Ben Reitzes:

April meeting is when they'll have those. I guess in March, though, the March meeting they'll have some, and then April is full effect, and you'll have full fourth quarter data in their pocket as well, which at that point I guess will dictate if they can keep going after January and if they do need to get down to something well below neutral into the low 2s. So yeah, the currency's still one of my... I mean, people tend not to care as much as I do, but I think from a sentiment perspective, it matters. I think people see the currency where it is and it's depressing.

Andrew Wallace:

Well, and I think perhaps for the bank, too, they could brush it off before it got to the danger zone level or the line in the sand, which is always when you talk to people, 145-ish was maybe where there would be concern. So now that we've approached that, maybe it does start to become more of a focus than it had been during the first part of the cutting cycle.

Ben Reitzes:

I will be listening if he talks about the limits for Canada-U.S. policy divergence, and if he's a little less a sanguine about that and how it's far away, it's still nowhere near the limits. Maybe we're approaching the limits or at/or approaching the limits. I think something definitely to listen for when he has a press conference at the end of this month. So, I mean, that's pretty much the view for now. I think still upbeat on the economy a little bit, just due to the tax holiday. And Ontario's going to be sending out checks very shortly, I believe. So I'm due for a thousand bucks, which I'm okay with.

Andrew Wallace:

Trip back to the LCBO?

Ben Reitzes:

Well, we'll see. I don't know, maybe I'll put it in my kids RESP. I mean, some of it is due to them.

Andrew Wallace:

Half.

Ben Reitzes:

It is for person. So there is some benefit to having children beyond their joyous moments and all the smiles they bring me. Yeah, but after that, after the first quarter, there's not a lot to be super upbeat on other than the fact that rates should matter and Canada's a highly leveraged economy. And so as rates have come down, that should be a positive for spending. It should be a positive for growth, generally. And then you have tariffs.

Andrew Wallace:

Yeah.

Ben Reitzes:

And that's the one wild card you mentioned that's probably keeping Canada relatively rich cross-market. I agree fully, that would keep me from really putting that trade on in full size. I think it's worth doing a little bit here and then just waiting and seeing how that evolves. And same on the currency front. The tariffs are an issue, and they're a potential economic issue. If he puts it on, the bank's going to cut, and they're probably going to cut aggressively, and you could get below two percent in that case. I wouldn't be completely shocked, as at that point, the currency....

I mean, does it really matter when you're facing that kind of economic shock? They probably just close their eyes and hope that it doesn't get a lot worse because it's going to get destroyed anyways. So I'm not even sure if it matters all that much what they do because a lot of the tariff impact will get absorbed through the currency. And so yeah, lots of cuts, unfortunately way lower rates.

Andrew Wallace:

And then housing really takes off.

Ben Reitzes:

But that'll be really interesting. And then I would hate the five-year sector. That would be super interesting.

Andrew Wallace:

Yeah, and that's where the cross-market really picks up, of course. I mean, under the kind of scenario we're laying out here and near term outlook, it seems as if, and the way it's traded, too, is this cross market could be very stubborn. Everyone, including myself, thought we got a bit of a gift at the holiday period, a liquid period, maybe that was a stretch, put some on. But if the bank does cut and they haven't really changed their tune and we don't get that incoming data, even if it is stronger for a couple months, tariff threats aren't going away anytime soon, especially when we don't have a government to negotiate for a period of time. So yeah, I mean, it lays out for that being perhaps a stubborn trade for the-

Ben Reitzes:

Second quarter.

Andrew Wallace:

... first part of the year, and then maybe it changes as we get into the spring period.

Ben Reitzes:

I like it as a second quarter trade, but I don't think you don't want to be involved. I think you have to have a little bit here, just given the levels.

Andrew Wallace:

And it really performs in a general rate rally.

Ben Reitzes:

Yes. And that as well, and there is risk of that. And I think that risk is obviously growing. So as we keep selling off here, we'll see what jobs do on Friday. I think that'll be interesting. The U.S. market reaction to payroll is if it is a soft number and we don't end up stronger on the day, that would be really telling for me that the market really actually cannot hold the bid, and then we actually do have a rate problem. So that's one thing I'll be watching for, or if it's a really strong number, I mean, and rates sell off and then risk pukes, then that would tell me that we also can't. So both ways I'm looking at it, or maybe it'll just be orderly and everything will be wonderful.

Andrew Wallace:

Hope not. We don't like orderly in our business.

Ben Reitzes:

Less fun. So your favorite trades, you don't like 5s on the curve medium term, cross-market fade Canada kind of overtime, clearly. Anything else you like, before we wrap up?

Andrew Wallace:

I know this more of a macro type lens, the podcast stuff, but one of the issues I have in trading in the two to five year sector is the three-year point is very rich in Canada now. It has become a lot cheaper on the curve, and that's largely a result of a lot of the heavily Bank of Canada owned bonds rolling down. June '27 is kind of being the last of those. And so the three-year sector was persistently rich because they funded rich and repo. The Bank of Canada owned a bunch, and it is a popular spot for central banks to add duration in Canada. So all those factors now, what you're having now is all the old five-year bonds that aren't owned by the bank rolling into the three-year sector. They have cheapened up, but in my opinion, based on what two's 5s have done, not nearly enough.

So from an RV perspective, I like trading short three year and four year bonds throughout this year around current levels. I think if you look at the asset swap curve, it's flat to inverted from two year to three year, and then you have a very nice upward sloping curve from four year, three and a half year to four year out to sevens and eights. I think what you should probably see is that asset swap curve just consistently be more upward sloping from 2s to 5s, and those three year and four year bonds kind of taking the bulk of that pressure.

Ben Reitzes:

Do you focus on the bigger issues? Is that the-

Andrew Wallace:

Yeah, bigger issues, higher coupons, smaller floats, and obviously then where they fund in the repo market. So certain bonds trade pretty consistently well through general collateral. Those bonds probably a little bit trickier to hold shorts in just because it costs you more, too. So all those factors, higher coupons, higher sizes, and then obviously paying attention to where they fund in the repo market. But generally speaking, from I think the Sep 27s out to the Sep 28s, as those start rolling down, too, I think those bonds have some cheapening to do, Sep 27s and March 28s currently.

Ben Reitzes:

Okay, Andrew. Thanks. Good first show.

Andrew Wallace:

Thank you. Yeah, I'm looking forward to this year. We'll have to do it again after the Leafs win the cup in the spring, and then we'll have to talk about-

Ben Reitzes:

Then there'll be a massive GDP boost.

Andrew Wallace:

Exactly, all the spending and-

Ben Reitzes:

I hope I can have you and your mustache on again soon.

Andrew Wallace:

Anytime, Ben. I appreciate it.

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.

Voiceover:

The views expressed here are those of the participants and not those of BMO Capital Markets, it's affiliates, or subsidiaries. For full legal disclosure, visit bmocm.com/macrohorizons/legal.