Highlights From the Bloomberg Canadian Fixed Income Conference

  • Housing prices, market transparency, regulation hot topics
  • ‘They should make up their minds at some point,’ on Bombardier

Bloomberg held its annual Canadian Fixed Income Conference at its headquarters in New York on Tuesday. Here are some of the highlights:

Prime Minister Justin Trudeau Should Make Up Mind on Bombardier Aid
“We keep telling them they should make up their minds at some point,” Quebec Finance Minister Carlos Leitao said. “The C Series is great but they have to start replenishing the new product pipeline. This is what a potential investment by the federal government would allow them to achieve.”

*Vancouver Housing May Correct 10 Percent or More
“There is downside to single family homes in Vancouver,” after policy changes in the last year such as higher down-payment requirements and a provincial tax on foreign buyers," said Stefane Marion, Montreal-based chief economist and strategist at National Bank of Canada, projecting drop. “I don’t think it sends the economy into a tailspin. It’s a healthy correction.”

*Canada’s Economy is Rotating in the Wrong Direction
“We are getting a mix of growth that’s not very healthy or sustainable,” Emanuella Enenajor, senior Canada and U.S. economist at Bank of America Merrill Lynch in New York, said, referring to a growth in household leverage.

*Government Debt Transparency Next on List for Canada Regulators
“We’ve heard the concerns and we will be working with the CSA and the Bank of Canada what next steps to take in transparency of government debt," Victoria Pinnington, senior vice-president of market regulation at the Investment Industry Regulatory Organization of Canada, said.

*It’s ‘High Time’ for Manufacturing to Step Up
“We are a well-diversified economy and it’s high time for other sectors, like services and manufacturing, to come back and play a bigger role in economic development.” National Bank of Canada Chief Executive Officer Louis Vachon said.

*It’s Not Easy Selling 50-Year Debt
“There’s lots of moving parts there," Toni Gravelle, head of the Bank of Canada’s financial market division. “It’s really a decision out of the Department of Finance but I think it’s a bit more complicated than it is taking advantage of lower” rates.

*Vancouver, Toronto Home Price Gains are Precarious
The Bank of Canada is “increasingly concerned” that the sustainability of the house price appreciation in Vancouver and Toronto is “becoming more precarious,” Gravelle added.

*Bond Traders Are Worried Over Unclear Costs of New Regulations
“We’re bombarded with all these rules changes and we need to evolve and adapt,” Martin Bellefeuille, managing director and head of fixed-income trading at Desjardins Securities, said. “There are some questions, I’ll say candidly, we don’t have answers to. And as a dealer, we have to know what the costs of these changes are.”

*The Canadian Dollar is Poised to Extend Declines
The loonie will extend its four-month slump as the U.S. Federal Reserve prepares to tighten monetary policy further while the chances of an interest-rate cut in Canada increase, according to analysts at Bank of Nova Scotia and Macquarie Capital Markets.
“Gradually over time you’ll see this policy divergence take place and manifest itself in this yield differential,” Macquarie’s David Doyle said.

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