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Trump administration 2024-2028

Altair said:
https://twitter.com/x/status/2082549814437314618

Buckle up folks.
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Apple cart could easily be overturned by September/October when the Fed meets next.

For my two cents, they do nothing until the Nov mid-terms and then, regardless of Trump wins or loses Congress and/or the Senate, they raise rates 25 basis points and then another 25 in January.
It’s never ‘one and done’ with the Fed, it’s 2 or more.

CAD will fall accordingly if they raise interest rates and we don’t. Our ability to have CUSMA signed or not signed will have zero bearing on this. Higher rates translates into a greater flow of foreign capital to take advantage of this.

A lower CAD means higher imported goods - think imported fruit/veggies, autos, computers, clothes, everything that’s imported. To offset this, we’ll make more money on our exports to the US as well earn USD on those exports. Also means that the US may in fact import more from us since the CAD will most likely be around 68-70 cents.
 
brihard said:
Jesus, a more than eight full basis points jump in ten year treasuries. That’s grim.

Trump will definitely have inflation problems heading into the midterms.
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And this is before they want an additional 500b for US defense spending. How they plan to fund it is going to interesting to watch if borrowing costs continue to rise.
 
Altair said:
And this is before they want an additional 500b for US defense spending. How they plan to fund it is going to interesting to watch if borrowing costs continue to rise.
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A higher USD will mean their exports around the world will fall accordingly and, for China, this will likely mean that they export even more to the US which will lead to a certain individual throwing a tantrum and threatening to slap more tariffs on China, the EU and of course us.
 
Czech_pivo said:
A higher USD will mean their exports around the world will fall accordingly and, for China, this will likely mean that they export even more to the US which will lead to a certain individual throwing a tantrum and threatening to slap more tariffs on China, the EU and of course us.
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...Why would the USD go up again?
 
Altair said:
...Why would the USD go up again?
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Because when you raise interest rates it tends to attract more foreign capital looking to park their money in your bonds for the higher rates. This leads to greater scarcity of USD, which in turn drives up the value of the USD.

EDIT:
For example, RBC is offering a fixed 1yr GIC rate of 3.90% for USD vs a 2.70% rate for CAD.

If the US raises their interest rates, the USD GIC rate will climb ever higher and our CAD will fall as a result.
 
Czech_pivo said:
Because when you raise interest rates it tends to attract more foreign capital looking to park their money in your bonds for the higher rates. This leads to greater scarcity of USD, which in turn drives up the value of the USD.

EDIT:
For example, RBC is offering a fixed 1yr GIC rate of 3.90% for USD vs a 2.70% rate for CAD.

If the US raises their interest rates, the USD GIC rate will climb ever higher and our CAD will fall as a result.
Click to expand...

Which would make our products more attractive on the world's commodity markets...
 
Czech_pivo said:
Because when you raise interest rates it tends to attract more foreign capital looking to park their money in your bonds for the higher rates. This leads to greater scarcity of USD, which in turn drives up the value of the USD.

EDIT:
For example, RBC is offering a fixed 1yr GIC rate of 3.90% for USD vs a 2.70% rate for CAD.

If the US raises their interest rates, the USD GIC rate will climb ever higher and our CAD will fall as a result.
Click to expand...
Trump put in a guy who is refusing to raise interest rates.
 
Czech_pivo said:
Because when you raise interest rates it tends to attract more foreign capital looking to park their money in your bonds for the higher rates. This leads to greater scarcity of USD, which in turn drives up the value of the USD.

EDIT:
For example, RBC is offering a fixed 1yr GIC rate of 3.90% for USD vs a 2.70% rate for CAD.

If the US raises their interest rates, the USD GIC rate will climb ever higher and our CAD will fall as a result.
Click to expand...
Interest rates are less closely tied to immediate events than Treasury yields. Mortgage and loan rates follow the Treasury/Bond market more closely than central bank rates. If U.S. 10-Year Treasuries hit 5.0% yield, things are going to get spicy AF. 30-years at 5.20% today isn’t as bad as 10-years at 5.20% tomorrow.
 
Altair said:
Trump put in a guy who is refusing to raise interest rates.
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He can resist but in the end the market will dictate what is to happen.
In today’s meeting he had 3 members of the Fed strongly supporting the raising of interest rates.
If July and August inflation numbers come in above 3-3.2% the pressure builds even more for a raise in September.
 
Good2Golf said:
Interest rates are less closely tied to immediate events than Treasury yields. Mortgage and loan rates follow the Treasury/Bond market more closely than central bank rates. If U.S. 10-Year Treasuries hit 5.0% yield, things are going to get spicy AF. 30-years at 5.20% today isn’t as bad as 10-years at 5.20% tomorrow.
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And people compare Canada and the USA in terms of GDP growth saying Canada is a laggard while not realizing the USA is running massive deficits.

Which, if you can afford, fine, but with yields hitting 5.0%....

Maturity US Yield Canada Yield Spread (Bps)
1-Year 4.09% 2.65% +144
5-Year 4.39% 3.20% +119
10-Year 4.67% 3.53% +114
30-Year 5.20% 4.02% +118

America is barrelling towards a financial crisis or crash, Canada is pretty stable, but you hear all about the "fiscal irresponsibility" of Canada while the USA is held up as a bastian of economic prowess
 
Good2Golf said:
Interest rates are less closely tied to immediate events than Treasury yields. Mortgage and loan rates follow the Treasury/Bond market more closely than central bank rates. If U.S. 10-Year Treasuries hit 5.0% yield, things are going to get spicy AF. 30-years at 5.20% today isn’t as bad as 10-years at 5.20% tomorrow.
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There are parallels between 2007 and now.
  • valuation of the stock market
  • rising bonds rates
  • greater number of individuals unable to carry their debt loads
  • lower labour participation rates.

The bomb dropped 1 yr later from the highs of 2007.
 
Czech_pivo said:
He can resist but in the end the market will dictate what is to happen.
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Yeah, that's how trump appointees work.
Czech_pivo said:
In today’s meeting he had 3 members of the Fed strongly supporting the raising of interest rates.
If July and August inflation numbers come in above 3-3.2% the pressure builds even more for a raise in September.
Click to expand...
It's at 3.5 right now and he is resisting. Colour me not impressed.
 
Czech_pivo said:
There are parallels between 2007 and now.
  • valuation of the stock market
  • rising bonds rates
  • greater number of individuals unable to carry their debt loads
  • lower labour participation rates.

The bomb dropped 1 yr later from the highs of 2007.
Click to expand...
Yup.

Buckle up.
 
Altair said:
And people compare Canada and the USA in terms of GDP growth saying Canada is a laggard why not realizing the USA is running massive deficits.

Which, if you can afford, fine, but with yields hitting 5.0%....

Maturity US Yield Canada Yield Spread (Bps)
1-Year 4.09% 2.65% +144
5-Year 4.39% 3.20% +119
10-Year 4.67% 3.53% +114
30-Year 5.20% 4.02% +118

America is barrelling towards a financial crisis or crash, Canada is pretty stable, but you hear all about the "fiscal irresponsibility" of Canada while the USA is held up as a bastian of economic prowess
Click to expand...
Now do the research on what a 25 basis point increase on the 30yr does to the amount of extra interest paid to service the US debt.
 
Altair said:
Yeah, that's how trump appointees work.

It's at 3.5 right now and he is resisting. Colour me not impressed.
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It’s too early to raise the rates, once you start you never just do 1 raise, it’s 2-3 or even more.
If they can bring inflation down to 2.8 or less consistently, they won’t move the rates.
 
Czech_pivo said:
Now do the research on what a 25 basis point increase on the 30yr does to the amount of extra interest paid to service the US debt.
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For each 25 basis point increase on the Fed rate, the US has to pay another 27 billion USD a year on their debt….

50 basis points is another 150-190$ billion a year in interest payments on their debt.
 
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