POLITICAL RISK: Freeland Follows Carney In Officially Entering Leadership Race
Jan-17 13:18
- Former FM Freeland has announced she will formally enter the race for the Liberal party leadership, following Mark Carney yesterday.
- It shouldn’t come as any surprise, with Carney and Freeland seen in a two-horse race for some time, and with Carney a firm favourite with Polymarket showing him at 70% since mid-week.
- ING on the leadership contest: “In our view, Carney remains the more market-friendly alternative, considering Freeland’s conflicting terms with Trump on trade. That said, it is likely that the new Liberal leader will face a parliament no-confidence vote and the probability of elections before the October statutory deadline remains high. The Conservative party, led by Pierre Poilievre, holds a huge lead in the polls, so we believe Poilievre's plan for the US-Canada trade relationship may be more relevant for Canadian markets than that of the new Liberal leader.”
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US: MNI POLITICAL RISK - Trump Agenda Uncertain Amid CR Backlash
Dec-18 13:12
- Congressional leaders yesterday unveiled a bipartisan deal to fund the government through March 14. The 1500-page-plus Continuing Resolution has angered conservative deficit hawks and Republican moderates alike, puncturing optimism that US President-elect Donald Trump’s election win, and Republican control of both chambers of Congress, will lead to greater unity on GOP policy priorities.
- Senate Majority Leader Chuck Schumer (D-NY) has dropped his bid to confirm 'anti-crypto' Democrat Caroline Crenshaw to serve another term on the Securities and Exchange Commission, leaving the position open for Republicans to fill in the next Congress.
- Trump’s special envoy for Ukraine and Russia plans to visit Ukraine next month and is reportedly open to meetings in Moscow. The report comes after Trump offered an ambiguous assessment of the war during his first post-election presser on Monday. While he stressed that Kyiv should “make a deal”, he refused to be drawn on whether he would press President Volodymyr Zelenskyy to make territorial concessions to Russia.
- The Biden administration is readying “dramatic last-minute steps” to restrict China’s supply of the world's most advanced chips.
- The Department of Energy released a long-awaited report that may prevent Trump from expanding US LNG exports.
- Poll of the Day: Voter concerns over election integrity have "vanished" after Trump’s victory.
Full article: US Daily Brief
BONDS: Fresh Selling
Dec-18 13:09
Another uptick in oil and continued pressure for bonds here, no new headline drivers, just continued assertion of the negative technical picture for bonds and an uptick in crude doing the work.
- The time of year and impending run of central bank decisions is limiting market participation, meaning it doesn't take much to move things.
CANADA: Scotia See Risk Of USDCAD Getting To 1.45 A Lot Sooner
Dec-18 13:07
Scotia write that recent Canadian political developments have increased the risk that USDCAD gets to 1.45“a lot sooner” than their post-election call for 1.45 in 2H25 before staying there to year-end.
- “Our fair value model shows USDCAD trading one standard deviation above estimated equilibrium (1.4165) today. Spot’s estimated fair value has been creeping higher since late November.”
- “If the political scene goes quiet over the holidays, the CAD may be able to steady. There is a late year kink is USDCAD’s seasonal profile that typically sees a small CAD rally into year-end. But markets are likely to come back with a vengeance in the new year.”
- “January is the best calendar month of the year for the USD against the CAD (average monthly return of +0.5% over the past 25 years). USD strength tends to persist deeper into Q1 before the CAD—usually—recovers in Q2/Q3.”
- “Mounting political risk in Canada suggest the USD is liable to start 2025 with a bit of a bang. A push to 1.45 (and potential overshoot) risks coming a lot earlier next year than we had imagined.”
