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Market Commentary

May 2022

The shape of the interest rate yield curve has caused much concern of late. In the U.S., rates inverted briefly with the 2-year bond yield slightly higher than the 10-year bond yield for a moment.  This closely followed relation has predicted each U.S. recession since 1969 – but has also incorrectly predicted many recessions as well. The situation should be monitored, but the silver lining is that the inversion this time was very brief and the signal tends to have a long lead time (12-18 months). If we are in a flat (or even inverted) yield curve environment, equity leadership will likely rotate into more defensive or less economically sensitive sectors. For the month of April, markets in Canada and the U.S. were off significantly, with the S&P 500 down about 6.5% in Canadian dollar terms, while the S&P/TSX was about 5% lower.  


​April 2022

The central bank’s job is getting more complex with a geo-political conflict adding to an already challenging first quarter environment of high inflation, low unemployment, signs of slower economic growth and still high monetary stimulus. Perceptions stood that central banks were already late in starting to remove the stimulus and the persistent price pressures only confirmed the Bank of Canada (BoC) and the U.S. Federal Reserve (Fed) are behind the inflation curve and much work is needed. 

​March 2022

As market focus shifts from a slowing pandemic, another more concentrated risk has appeared in the form of a Russian invasion of Ukraine. The result of the conflict on financial markets remains uncertain, however it clearly will have an impact on the devleoped world through higher energy and food prices. Between them, Russia and Ukraine are significant exporters of crude oil, natural gas and wheat. 

February 2022

After an extremely strong 2021, January presented investors with more volatile stock swings. No sector was harder hit than high multiple technology stocks as concerns about rising inflation and associated higher interest rates took center stage. Although Omicron continues to be in the headlines, it is not the primary market mover at this point and is the belief of many that COVID-19 will soon morph into something more akin to a bad flu (more infectious but less severe than it’s original iteration).

January 2022

Despite a second calendar year of a global pandemic, in 2021 equity markets in North America - and many parts around the world - climbed to new all time highs. Expectations for a global economic recovery from a weak 2020, as well as continuted historically low interest rates helped fuel performance.