“The reality is that no country can afford to have the most aggressively tight monetary policy. Whoever is foolish enough to attempt to return their monetary policy to normalcy, finds themselves at the end of a strong currency, and importing all the world’s deflation.”
“…or what counts as ‘fireworks.'”
BANK OF CANADA WILL BE ‘CAUTIOUS’ WITH FUTURE RATE INCREASES
As usual, the docket is full and the risks are multiplying.
Oh, boy. Try to wrap your head around all of this.
“I can already hear the guffaws from all my hard money readers. The last thing the government needs to do is spend more money is what they will say. We need to save more, spend less, and tighten our belts. Well, that has been tried.”
Seemingly unwilling to risk any further damage to his already low approval ratings, Trump ultimately decided to go ahead and take the drama out of the debt ceiling debate, striking a deal with Democrats – much to chagrin of the GOP. We’ve now got a new lease on life – until December. And even that…
We’re going to keep writing about today’s BoC rate hike because as noted earlier, it’s more important than most stories that contain the word “Canada.”
The BoC hike is important. Poloz is effectively being used as a guinea pig by DM central bankers to see what happens when you hike rates in the post-crisis era. And if you’re a market watcher in the U.S. or Europe, you should take note of what the TSX did as soon as the decision came down.
This wasn’t entirely unexpected given the hot economic data that’s been coming in fast and furious over the past couple of months, but it is extremely notable coming after the July hike.
To be sure, whatever you thought was going to dominate the news flow in the week ahead is probably going to take a backseat to North Korea, for obvious reasons.
But North Korea isn’t the only thing on traders’ minds this week. Not by a long shot.
Y/Y, Canada’s economy grew by 4.6% in the 12 months through the end of May. That’s the highest growth rate since the millennium!
And thus ends one of the most painful chapters in the history of spec positions gone horribly wrong.
“Nominal home prices in Canada have grown by 13% over the past year, and by 200% since 2000. These sharp increases in home prices in Canada have invited comparisons with the US housing market in the period leading up to the Global Financial Crisis.”