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MD Blog

  • Boc Banner Apr 19

    Interest Rates Hold Steady: Bank of Canada

    Although it says higher interest rates will eventually be required, the Bank of Canada announced Wednesday that it is holding its overnight lending rate steady at 1.25%. The announcement and the Bank’s most recent Monetary Policy Report point to weaker than expected growth in Canada during the first half of 2018, the result of poor household spending and slow export activity. Although GDP growth was weaker than the Bank had expected, it says ...

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    Bank of Canada: No change to interest rates at this time

    As expected, the Bank of Canada today left the overnight interest rate target unchanged at 1.25%. The resulting change in the value of our dollar was insignificant, although Canadian bond yields did decline. The Bank continues to monitor the sensitivity of our economy to higher rates. Higher bond yields and stiffer mortgage conditions in Canada have cooled the housing market, and reduced credit growth. The Canadian consumer’s ability to spend ...

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    Interest Rates Are on the Rise. Here’s Why.

    As expected, the Bank of Canada (BoC) raised its overnight interest rate on Wednesday, January 17, from 1% to 1.25%. In the official announcement and the monetary policy report released on the same day, the Bank cited more robust economic growth here in Canada and abroad as important factors in the decision. The economy is living up to its potential From 2008 until mid- last year, Canadian economic growth had been sluggish according to the ...

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    Interest Rates on Hold. Why, and What Does it Mean for You?

    Last Wednesday, December 6, the Bank of Canada (BoC) held firm on its target for the overnight interest rate at 1.0%, as was widely anticipated by the market. The Canadian economy is currently on hold, positioned between forces that could lead to expansion or further inactivity. Canadian growth and employment are strong… On the expansionary side, Canada has been enjoying more robust domestic growth from improved business investment, increasing ...

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    Why Moody’s Downgrade of Canadian Banks Didn’t Keep Me Up At Night

    Did you all catch the big news headlines roughly two weeks ago when Canada’s big six banks had their credit ratings downgraded by Moody’s? According to Moody’s, the downgrade reflects its “ongoing concerns” about how the “continued growth in Canadian consumer debt and elevated housing prices leaves consumers, and Canadian banks, more vulnerable to downside risks facing the Canadian economy than in the past.” Banks are critically ...

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    Teck Resources: How We Manage a Highly Volatile Stock

    I’d love to tell you a story about how we bought Teck Resources (TSX: TECK.B) in January 2016 when it hit a low of $3.80, and sold it in November 2016 when it reached a high of $35.02—a rise of 822%! But that would be pure fantasy. Owning Teck Resources has indeed contributed to the outperformance of one of our portfolios—the Canadian Equity Segregated Portfolio. But the fact is, we have been systematically reducing our exposure to Teck over ...

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    Sounding the Alarm on Canada’s Debt: Are Our Banks at Risk?

    You may have heard about a recent report that flags Canada as being at risk of a financial crisis. The Bank for International Settlements’ (BIS) latest Quarterly Review, released on March 6, ranks Canada as second only to China in showing the highest early warnings signs of stress for domestic banking, thanks to our high consumer debt levels. The report stipulated that a significant downturn would depend on things like rising interest rates and ...

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    Why I’m Blaming Trump for my Cheaper Bowl of Shreddies

    Last fall, I was in New York for an investment conference hosted by the Center for Financial Stability.  Speakers included world-leading asset managers, academics and policy makers – an exciting line-up for an investment nerd like me! A recurrent theme during the conference was the uncertainty around Donald Trump’s policies and their potential impact to create a wider range of risks for capital markets and the economy. So, just ahead of ...

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    Interest Rates are on the Rise but so are Future Returns

    By Wesley Blight, CFA, CIM, FCSI Portfolio Manager, Fixed Income Earlier this week, when some of the big banks started raising rates on mortgages and other loans, I tried hard to sound empathetic as my friends and colleagues complained about their soon-to-be higher borrowing costs. I also recognize that recent returns from fixed income have been negative but honestly, I welcome higher interest rates. As consumers, we’ve grown accustomed to the ...