Good morning,

Global equities are up in most overseas markets today, as European equities have pushed forward for another day of gains after a volatile few weeks. Asian markets are mostly up, with the exception of the Hang Seng and the Nikkei 225 posting moderate declines. North American equity futures pointed to a positive opening and have so far delivered at the time of writing. Volatility remains high, however, the VIX (a real-time market index representing the market’s expectations for volatility over the next 30 days), has fallen from six-straight days of increases.

According to Reuters, it is more likely than not that the Bank of Canada (BoC) will raise its benchmark lending rate today for the first time since 2018. This comes as consumer prices are rising at their fastest pace in about 30 years and the recent Omicron impact is beginning to subside. Markets currently see odds at 65-70% that the Bank will increase rates to 50bps from its current low of 25bps. Nonetheless, respondent analysts who were surveyed by Reuters are less certain, with 77% seeing the BoC holding rates steady until March. The BoC is expected to raise rates aggressively this year to curb the broad based inflationary conditions that have come after global supply-side challenges, substantial monetary and fiscal stimulus, and heightened demand conditions. BoC Governor Tiff Macklem has renewed the inflation target of 1-3% and stated that the slack in Canada’s economy was “substantially diminished,” as he was uncomfortable with the current path of inflation.

We will provide an update after the BoC’s decision today.

Please let us know if you have any questions or if there is anything our team can do to help.

Best,

Devin