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How high can Canadian interest rates go?

A roundup of what The Globe and Mail's market strategist Scott Barlow is reading today on the Web

The Financial Times reports that Canadian oil production plans are thwarting OPEC's strategy,

"Canada, home of the world's third-largest oil reserves, might have seen producers slash capital spending during the three-year-old oil decline, but earlier investments in the country are set to keep pushing output higher for at least the next 18 months. A forecast released this month by the Canadian Association of Petroleum Producers sees the country's output increasing by 270,000 barrels a day in 2017 and another 320,000 b/d next year."

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"Canada oil output threatens to derail OPEC plan" – Financial Times
See also: "Oil prices rise to two-week high on dip in U.S. output" – BNN
"Oil Set for Longest Winning Streak in 2 Months on U.S. Output" – Bloomberg
"Goldman Sees Oil Staying Lower Without Deeper OPEC Cuts" – Bloomberg


Bloomberg details the travails of the U.S. asset management industry as lower fees, competition and new product design cuts in to profits despite the bull market,

"Retail wealth management companies are combating the rise of low-cost index fund investing and the advent of robo-advisers, which allow investors to create portfolios online for a fraction of the expense of traditional firms. Such forces may spur more industry consolidation and a contraction of profit margins, according to a December survey of industry leaders. During a year in which the MSCI All Country World Index returned 8.5 percent, revenue per adviser fell 1 percent to $583,000 in 2016. The number of commissionable equity trades per adviser hit a low of 214 last year, down 22 percent from 2013, PriceMetrix said."

"Wealth Management Industry Hit by Lower Fees, Fewer New Clients" – Bloomberg


Interest rate and bond yield forecasts have swung from higher to lower and now higher again. Domestically, the high levels of household debt puts a pretty firm cap on how high rates can go in my opinion. Enough rate increases to cause a lot of debt defaults will just result in rate cuts to maintain consumption levels. I'm not, however, pretending to know where the limit is at this point.

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From Bloomberg,

"Just a week after signaling near-zero interest rates were appropriate, Bank of England Governor Mark Carney suggested on Wednesday that the time is nearing for an increase. His U.S. counterpart, Janet Yellen, said her policy tightening is on track and Canada's Stephen Poloz reiterated he may be considering a rate hike."

"Central Bankers Tell the World Borrowing Costs Are Going Up" – Bloomberg


Tweet of the Day: "@dbcurren BMO: Canada bond yields have backed up; 5-yr yield approaching highest level since '14; 5-yr fixed mortgage rates tend to follow #cdnecon " – Twitter

Diversion: "Canada Says It Has Authority to Censor Internet in United States" – Mother Jones

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