BOC: Rising Hedge Fund Activity A Threat To Canada Bond Market Stability
May-08 14:00
- Increased hedge fund activity in GOC bond market poses risk to financial system given their leverage and potential for rapidly unwinding positions amid shifting U.S trade policy, BOC's Financial Stability Report Thursday says.
- "The increased activity by hedge funds has helped absorb increased issuance of government debt, keeping yields lower and liquidity higher. Hedge funds have also taken on increasingly large amounts of leverage to fund their purchases of government bonds. This makes them more likely to pull back from these crucial markets in periods of stress, introducing added volatility," Senior Deputy Governor Rogers said.
- "As hedge funds take on a growing role in government bond markets, it is increasingly important for them to have robust funding agreements and sufficient liquidity to weather periods of market stress," the Bank said. In some GoC debt auctions hedge funds now buy almost 50% of securities.
- BOC says Canadian households have been resilient and would be able to absorb higher mortgage renewal payments but the ongoing trade war poses risks to employment and income. BOC added the trade war will test resiliency of businesses, specifically those tied to trade.
- "A long-lasting trade war poses the greatest threat to the Canadian economy. It also increases risks to financial stability." Governor Macklem said.
- BOC says the share of households behind on credit card and car loan payments continue to rise for households without a mortgage. About 60% of outstanding mortgages in Canada will renew in 2025 or 2026 but the expected strain is less as interest rates have fallen in the past 12 months after an earlier jump.
- BOC says banks are well capitalized against potential losses from a long trade war.
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MNI: CANADA MAR IVEY PURCHASING MANAGERS INDEX 51.3 SA
Apr-08 14:00
- CANADA MAR IVEY PURCHASING MANAGERS INDEX 51.3 SA
US-RUSSIA: TASS: US-Russia Talks To Focus On Normalising Work Of Embassies
Apr-08 13:54
State-run TASS giving more details on earlier Kremlin comments confirming that talks will resume in Istanbul on 10 April between Russian and US delegations. The talks "will be devoted to normalizing the work of embassies" according to the Russian Foreign Ministry. The talks will be led by Russia's ambassador to the US Alexander Darchiev and US Assistant Secretary of State Sonata Coulter.
- President Vladimir Putin’s foreign policy aide, Kirill Dmitriev, was in Washington last week for talks with senior US officials and indicated afterwards that another round of talks could take place in the near future.
- Russian Foreign Minister Sergey Larvrov said earlier: "Our experts have pointed out that the current security architecture cannot be discussed in isolation from the nuclear capabilities of other nations, these issues must be approached [jointly]. That’s precisely why both Moscow and Washington are investing considerable energy in repairing the damage inflicted on our relationship in recent years, particularly during the previous US administration."
- Recent reports have suggested increasing frustration within the White House at Russia's perceived foot-dragging on implementing an energy ceasefire and Black Sea truce.
EQUITY TECHS: E-MINI S&P: (M5) Gains Appear Corrective
Apr-08 13:50
- RES 4: 5797.02 50-day EMA
- RES 3: 5610.64 20-day EMA
- RES 2: 5435.00 High Apr 4
- RES 1: 5286.50 High Apr 7
- PRICE: 4244.25 @ 14:39 BST Apr 9
- SUP 1: 4832.00 Low Apr 7
- SUP 2: 4760.88 1.618 proj of the Feb 19 - Mar 13 - 25 price swing
- SUP 3: 4663.75 1.764 proj of the Feb 19 - Mar 13 - 25 price swing
- 7SUP 4: 4519.84 61.8% retracement of the Oc ‘22 - Feb ‘25 bull cycle
S&P E-Minis continues to trade in a volatile manner. A bearish theme remains intact and the latest fresh cycle lows, strengthen current conditions. Scope is seen for an extension towards the 4800.00 handle next. Moving average studies are in a bear-mode position, highlighting a dominant downtrend. Initial firm resistance is seen at 5610.64, the 20-day EMA. Short-term gains are for now, considered corrective
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