Invesco Canada blog

Insights, commentary and investing expertise

3 reasons for active management in EM

Now that passive index strategies are ubiquitous across markets, I am pleased to see that the overall active vs. passive debate is over, replaced by a more nuanced discussion about where each approach makes sense in an investor’s portfolio. I am of the firm belief that emerging markets is an investing space in which active management is not only preferred, but in most cases, vital. Here are my three main reasons why.

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U.K. triggers Brexit with Article 50: What happens now?

The Brexit process started today, when British Prime Minister Theresa May formally notified the European Union (EU) of the U.K.’s intention to withdraw from the EU under Article 50 of the Lisbon Treaty.

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Will Trump’s fiscal stimulus lead to inflation?


March 27, 2017
Subject | Institutional | Macro views

Financial markets have reacted strongly to the election of U.S. President Donald Trump. While equities in the U.S. and elsewhere have risen strongly (reflecting expectations of stronger growth and therefore improved corporate earnings), bond prices have fallen (reflecting higher yields, in turn a result of higher inflation expectations). As debate continues around President Trump’s fiscal stimulus program, a key question has emerged: What role might his policies play in creating inflation?

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Third time’s a charm

The U.S. Federal Reserve (Fed) hiked its key interest rate by 0.25% today, to a range of 0.75%–1.00%, marking the third increase in the current cycle. Fixed income markets had essentially priced in the increase two weeks ago, when nearly every Fed speaker acknowledged that a March hike appeared to be warranted. The vote was not unanimous as Neel Kashkari, President of the Federal Reserve Bank of Minneapolis, voted against the action, preferring to keep the target rate unchanged at this meeting.

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The future of ECB QE: Is the end in sight?

In recent months, consumer prices in the euro area have begun to align with the European Central Bank’s (ECB) inflation target of just under 2%.1 We expected January headline inflation to be around 1.8%, a far cry from the deflationary conditions that convinced the ECB to begin its asset purchase program (quantitative easing, or QE) in 2015 and then extend it in 2016. As we look forward to 2017 and beyond, we ask whether QE should extend beyond March 2018 or will the inflation hawks and external voices force the ECB to end it before the region is ready?

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Currency outlook: CAD overvalued and USD mixed

The Canadian dollar has appreciated against the U.S. dollar since the U.S. presidential election in November. Some of the strength has been due to the higher price of oil on the back of promised cuts by OPEC producers in late 2016. In addition, a recent string of positive employment reports in Canada has supported the currency. Bank of Canada Governor Poloz attempted to limit further appreciation by mentioning that a rate cut was still possible at its January meeting with limited success. We believe the Canadian dollar remains overvalued.

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