Invesco Canada blog

Insights, commentary and investing expertise

Bank of Canada downgrades economic outlook


October 30, 2019
Subject | Macro views

The Bank of Canada held the overnight rate at 1.75% at today’s meeting. While the result was widely expected, the tone of the statement, as well as the press conference, were more downbeat than anticipated.

Continued

Comments Off on Bank of Canada downgrades economic outlook

Will this week’s data confirm last week’s optimism for stocks?


October 29, 2019
Subject | Macro views

Last week was a “risk on” week for the markets, with stocks rising. The MSCI All Country World Index rose during the course of the week, the S&P 500 Index came close to its all-time high, and the tech-heavy Nasdaq Composite Index surged a robust 1.9%.1 U.S. Treasury yields also rose as fear dissipated – the 10-year Treasury yield rose to 1.8% and the 30-year finished at 2.29%.1 By the end of last week, there was a relatively comfortable 18-point spread between the 2-year and the 10-year Treasury yield.1

Continued

Comments Off on Will this week’s data confirm last week’s optimism for stocks?

Should investors be scared of a Halloween sell-off?


October 22, 2019
Subject | Macro views

Many people around the world observe Halloween in the month of October, celebrating all that is spooky and macabre. My kids have all been enthralled with Halloween, choosing their costumes several months in advance (one year, my older son insisted on wearing his costume every single day of the month of October). And plenty of adults who have outgrown trick-or-treat still believe that October would not be complete without horror movies running non-stop throughout the month. But no matter if you celebrate with cute kids’ costumes or elaborate haunted houses – what makes Halloween fun is the knowledge that the scares aren’t real.

Continued

Comments Off on Should investors be scared of a Halloween sell-off?

Is long-term Canadian equity underperformance coming to an end?


October 10, 2019
Subject | Macro views

The investing world is understandably focused on the U.S. After all, it’s the biggest economy, has the largest stock market, is home to the some of the best-known companies and, admittedly, the political spectacle in Washington can be entertaining at times. As a result, the U.S. frequently steals the limelight from its neighbor to the north.

Continued

Comments Off on Is long-term Canadian equity underperformance coming to an end?
European Central Bank

Past presidential turmoil didn’t keep stocks down for long


October 8, 2019
Subject | Macro views

On Saturday evening, Oct. 20, 1973, U.S. President Richard Nixon ordered Attorney General Elliot Richardson, Deputy Attorney General William Ruckelhaus, and Solicitor General Robert Bork to fire independent special prosecutor Archibald Cox, resulting in the resignations of Richardson and Ruckelhaus and the dismissal of Cox. In the month after this so-called “Saturday Night Massacre,” the U.S. equity market, as represented by the S&P 500 Index, fell by more than 10%.1 By the time Nixon resigned almost a year later, U.S. equities had fallen by 26%, and ultimately by 39% at the trough.1

Continued

Comments Off on Past presidential turmoil didn’t keep stocks down for long

News versus noise: Assessing the market impact of three major headlines


September 30, 2019
Subject | Macro views

One of the key themes I have been discussing in the last several years is geopolitical disruption – and we got a heavy dose of it last week. However, one of my main points over the past few years is that investors should try to identify the geopolitical disruption that really matters for the economy and markets, and ignore the events that are just background noise (most fall into this category, in my view). In particular, issues that can increase economic policy uncertainty are what we need to be sensitive to, as they can have significant consequences for economies and markets. Below, I assess today’s three major headlines and where they fall on the spectrum of “news versus noise” in relation to their potential longer-term impact on the markets.

Continued

Comments Off on News versus noise: Assessing the market impact of three major headlines

Can you reduce risk without raising your bond allocation?


September 24, 2019
Subject | Macro views

Many investors may be facing a catch-22 situation in their portfolios. Recent strong returns in the global bond market may have pushed their fixed income weighting beyond their strategic allocation. But the return of equity market volatility may leave them wary of re-allocating their bond gains into stocks.

Continued

Comments Off on Can you reduce risk without raising your bond allocation?

Markets shake off a series of unusual events


September 23, 2019
Subject | Macro views

I am the mother of three, including a 13-year-old girl and a 12-year-old boy. Like many American children their age, they spent the last several months obsessed with an urban myth surrounding Area 51. Many conspiracy theorists believe that Area 51, a secretive Air Force base in Nevada, is being used by the U.S. military to house aliens. One creative guy thought it would be funny to start an online movement to storm Area 51 this past weekend. What began as a joke gathered steam quickly, and 2 million people signed up to force entry into Area 51. That huge response created great excitement and anticipation about what the event would bring.

Continued

Comments Off on Markets shake off a series of unusual events

Fed cut meets market expectations, but future cuts are in doubt


September 20, 2019
Subject | Invesco | Macro views

The U.S. Federal Reserve (Fed) cut interest rates by 25 basis points Wednesday to a range between 1.75% and 2%, as widely expected by markets. However, the Fed’s economic projections showed that the median Federal Open Market Committee (FOMC) member does not expect to cut rates again this year, marking potential disagreement among FOMC members and with markets; the bond market is currently pricing an additional rate cut this year and some FOMC members have expressed interest in future cuts.

Continued

Comments Off on Fed cut meets market expectations, but future cuts are in doubt

Could ‘helicopter money’ help Europe’s economy take flight?


September 16, 2019
Subject | Macro views

Last week, the European Central Bank (ECB) decided to take a significant step away from normalization and toward more accommodation. It cut the deposit facility rate by 0.1% to a level of -0.5% (the first time the deposit rate has changed since 2016) and announced a re-ignition of quantitative easing (QE).1

Continued

Comments Off on Could ‘helicopter money’ help Europe’s economy take flight?

Is a U.S. recession inevitable?


September 10, 2019
Subject | Macro views

The yield curve has been a constant topic of conversation among investors since mid-August, when the 2-year/10-year Treasury curve briefly inverted and launched furious speculation that a recession may be around the corner.  The same holds true among Invesco’s market strategists, who have been debating what an inverted yield curve means and whether a recession is indeed inevitable.

Continued

Comments Off on Is a U.S. recession inevitable?

Uncertainty casts its shadow over the U.S., Europe, and China

This week, we are going to take a deeper dive into the issues currently facing the U.S., Europe, and China. Guiding us through this “regional roundup” are three of Invesco’s Global Market Strategists who are on the ground in New York, London and Hong Kong. While the details differ in each region, the biggest commonality they report is the heavy shadow of uncertainty that continues to linger over markets.

Continued

Comments Off on Uncertainty casts its shadow over the U.S., Europe, and China

Five things to watch in September


September 3, 2019
Subject | Macro views

August is supposed to be a slow, relaxing month – but this August was anything but that for investors. Trade frictions were on the rise for much of the month. The U.S. Treasury yield curve inverted several times, causing jitters for investors concerned that a U.S. recession is imminent. Of course, stock volatility rose, with the CBOE Volatility Index (VIX) hitting its highest level of 2019 in the month of August.1 Instead of enjoying calm, sunny days, markets were rocked last month by interviews with Federal Open Market Committee (FOMC) members at Jackson Hole, tweets from President Donald Trump, and geopolitical events in the U.K., Italy and India – to name just a few.

Continued

Comments Off on Five things to watch in September

It’s time to trade in uncertainty for stability


August 29, 2019
Subject | Macro views

As we embarked on this year, I expected 2019 to be the year of slower growth but better policy. And that, I posited, would be better for financial markets than 2018’s combination of strong growth and bad policy, specifically Federal Reserve (Fed) interest rate hikes and trade tariffs.

Continued

Comments Off on It’s time to trade in uncertainty for stability

Uncertainty hits a high point as the trade war escalates


August 26, 2019
Subject | Macro views

Last week was one of those weeks when anyone following the news flow closely would have a serious case of whiplash. Friday alone put me in a neck brace as we saw a serious escalation in the trade wars between the U.S. and China. Other notable events last week included:

Continued

Comments Off on Uncertainty hits a high point as the trade war escalates

Beyond the yield curve: Other economic indicators to watch


August 20, 2019
Subject | Macro views

Last week, the U.S. Treasury yield curve, specifically the spread between the 10-year U.S. Treasury rate and the 2-year U.S. Treasury rate, briefly inverted. An inverted yield curve is considered to be a good predictor of recession, and so markets sold off on fears that a recession will occur in the next year. However, I believe a U.S. recession is not a foregone conclusion — and so we should monitor the economic data closely. I have received a number of questions from clients and the media about what other indicators to follow to help divine how the economy is doing. The following are just a few indicators to watch — and some caveats:

Continued

Comments Off on Beyond the yield curve: Other economic indicators to watch