Monetary policy
Exclusive Bank of Canada Preview: We say "no", but the market says "go"
We forecast the Bank of Canada will keep its policy rate at 2.25% on October 28, contrasting with OIS pricing implying 85% of a 25bp hike.
Skipper Warsh and his Hawkish Crew
We expect the FOMC to remain on hold in October. However, we are likely to see Hammack, Kashkari and Logan repeat their July dissents in favor of a hike at this meeting.
Government debt sustainability
Rising debt and interest costs are increasing fiscal pressure. An acute crisis is unlikely, but gradual deterioration remains a key risk.
The ECB has no reason to accelerate its hiking cycle
Inflation continues to be the ECB’s main concern, but it doesn’t urgently require another hike. We expect the ECB to leave the policy rate at 2.50% next week.
Higher Ground
Looking ahead, we expect the 10 year US treasury yield to move sideways through the remainder of 2026. We see some downward potential in 2027.
Global daily: Unwanted, not unwarranted
Oil prices rose again yesterday, while US bond yields stabilised and the French-German bond spread inched up. The French government has yet to reassure markets.