Invesco Canada blog

Insights, commentary and investing expertise

Mid-year market outlook: Canadian & world markets in 3D


July 14, 2017
Subject | Institutional | Macro views

Global stocks turned in a strong performance in the front half of 2017 despite geopolitical and monetary policy risks. The question, of course, is whether this performance trend can continue in the second half. I believe these two risks will cast an even longer shadow over markets going forward – making concepts such as diversification and risk management even more important for investors’ portfolios.

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Up, up and away: BoC hikes rate

Following recent upbeat comments, the Bank of Canada (BoC) announced today that it would hike the overnight target rate to 0.75% from 0.50%. This is the first rate hike since 2010, as the BoC has become confident that the current “above potential growth” will continue, leading it to take back one of two emergency rate cuts enacted in 2015.

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Interest-rate outlook: Expect rising rates in Canada

In June, Canadian 10-year government bond yields bounced off their lowest levels of the year, to 1.63%, as first quarter growth came in above expectations and central banks express confidence that monetary policy has accomplished it’s goal.1 The Bank of Canada (BoC), in particular, is less worried about uncertain U.S. trade policy and another substantial drop in oil prices, and becoming worried that excess capacity is beginning to dwindle. Their optimism may prove to be premature as inflation remains very low, so we are watching its stance closely. We expect interest rates in Canada to rise from current levels.

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Currency outlook: Strong global growth mixed for U.S. dollar

The Canadian dollar has been in a slow decline over the last year, but has shown strength recently. As growth rebounded in the first quarter, the Bank of Canada (BoC) appears to be becoming concerned that excess capacity may be declining faster than they would like. While oil prices appear to have peaked for the year due to U.S. oil production, there has been little effect on the currency. We remain underweight the Canadian dollar due to the overleveraged Canadian consumer, but we are monitoring the recent hawkish BoC rhetoric closely.

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What does MSCI’s China A-Shares decision mean for investors?


June 26, 2017
Subject | Institutional | Invesco | Macro views

After four years of discussions, on June 20, 2017, MSCI announced a ”yes” decision on including China A-shares in the MSCI Emerging Markets Index, which tracks $1.6 trillion1 worth of assets around the world, and related indexes.2 The decision is seminal because it provides previously unavailable A-share exposure in emerging markets (EMs) and global indexes.

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Market review: The Fed takes on the elephant in the room


June 21, 2017
Subject | Institutional | Invesco | Macro views | Trimark

Last Wednesday, the Federal Reserve (Fed) announced it would raise the fed funds rate by a quarter point – its fourth rate hike since starting to tighten in December 2015. This was very much expected and created no surprises for investors. But the far bigger news coming out of the Federal Open Market Committee (FOMC) meeting is that the Fed released its plan to normalize its balance sheet. And with that, the Fed has finally addressed the elephant in the room.

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