Latest news with #BMOPrivateWealth
CTV News
29-05-2025
- Business
- CTV News
Trump tariffs suffer staggering setback in U.S. court
Carol Schleif, chief market strategist at BMO Private Wealth, shares her outlook of the market and analysis on the setback Trump tariffs got in a U.S. court.
Asharq Al-Awsat
18-05-2025
- Business
- Asharq Al-Awsat
Moody's Downgrade Intensifies Investor Worry about US Fiscal Path
A US sovereign downgrade by Moody's has exacerbated investor worries about a looming debt time-bomb that could spur bond market vigilantes who want to see more fiscal restraint from Washington. The ratings agency cut America's pristine sovereign credit rating by one notch on Friday, the last of the major ratings agencies to downgrade the country, citing concerns about the nation's growing $36 trillion debt pile. The move came as Republicans who control the House of Representatives and the Senate seek to approve a sweeping package of tax cuts, spending hikes and safety-net reductions, which could add trillions to the US debt pile. Uncertainty over the final shape of the so-called "Big Beautiful Bill" has investors on edge even as optimism has emerged over trade. The bill failed to clear a key hurdle on Friday even as US President Donald Trump called for unity around the legislation. "The bond market has been keeping a sharp eye on what transpires in Washington this year in particular," said Carol Schleif, chief market strategist at BMO Private Wealth, who said that Moody's downgrade may make investors more cautious. "As Congress debates the 'big, beautiful bill' the bond vigilantes will be keeping a sharp eye on making them toe a fiscally responsible line," she said, referring to bond investors who punish bad policy by making it prohibitively expensive for governments to borrow. The downgrade from Moody's, which follows similar moves from Fitch in 2023 and Standard & Poor's in 2011, will "eventually lead to higher borrowing costs for the public and private sector in the United States,' said Spencer Hakimian, founder of Tolou Capital Management in New York. Even so, the ratings cut was unlikely to trigger forced selling from funds that can only invest in top-rated securities, said Gennadiy Goldberg, head of US rates strategy at TD Securities, as most funds revised guidelines after the S&P downgrade. "But we expect it to refocus the market's attention on fiscal policy and the bill currently being negotiated in Congress," Goldberg said. FOCUS ON BILL One question is how much pushback there will be in Congress over whether fiscal principles are being sacrificed, said Scott Clemons, chief investment strategist at Brown Brothers Harriman, adding that a bill that shows profligate spending could be a disincentive to add exposure to long-dated Treasuries. The Committee for a Responsible Federal Budget, a nonpartisan think tank, estimates the bill could add roughly $3.3 trillion to the country's debt by 2034 or around $5.2 trillion if policymakers extend temporary provisions. Moody's said on Friday successive administrations have failed to reverse the trend of higher fiscal deficits and interest costs, and it did not believe that material reductions in deficits will result from fiscal proposals under consideration. Concern shows up in market pricing. A recent increase in the 10-year Treasury term premium - a measure of the return investors demand for the risk of holding long-dated debt - is partly a sign of underlying fiscal worry in the market, said Anthony Woodside, head of fixed income strategy at Legal & General Investment Management America. Woodside said the market was "not assigning much credibility" to the deficit being brought down in a material way. Treasury Secretary Scott Bessent has said the administration is focused on containing benchmark 10-year yields. The yield, last seen at 4.44%, is about 17 basis points below where it was before Trump took office in January. "Certainly you could see a reaction in yields to a pretty substantial increase in the deficit at a time when we're already running pretty significant deficits," said Garrett Melson, portfolio strategist with Natixis Investment Managers Solutions. A White House spokesperson dismissed concerns around the bill. "The experts are wrong, just as they were about the impact of Trump's tariffs, which have yielded trillions in investments, record job growth, and no inflation," said Harrison Fields, special assistant to the President and principal deputy press secretary, in a statement. The White House characterized the Moody's downgrade as political. White House communications director Steven Cheung reacted to the move via a social media post on Friday, singling out Moody's economist, Mark Zandi, and calling him a political opponent of Trump. Zandi, who is chief economist at Moody's Analytics, a separate entity from the ratings agency, declined to comment. Some in the market believe the fiscal outlook will improve with the tax package compared to earlier expectations, due to tariff revenues and spending offsets. Barclays now estimates the cost of the bill to increase deficits by $2 trillion over the next 10 years compared to expectations of around $3.8 trillion before Trump took office. X FACTOR? Urgency is mounting as key deadlines approach. House Speaker Mike Johnson has said that he wants his chamber to pass the bill before the US Memorial Day holiday on May 26, while Bessent has urged lawmakers to raise the federal government's debt limit by mid-July. The US government reached its statutory borrowing limit in January and began employing "extraordinary measures" to keep it from breaching the cap. Bessent has indicated the government could hit the so-called X-date - when it runs out of cash to meet all its obligations - by August. Investor nervousness around the debt limit has started to show up. The average yield on Treasury bills due in August is higher than the yield of bills with adjacent maturities. While there is broad agreement within the Republican Party to extend Trump's 2017 tax cuts, there is a divide on how to achieve spending cuts that would help offset revenue loss. The room for manouvre on spending cuts is limited. Mandatory spending, including on social welfare programs that Trump has pledged not to touch, accounted for a vast majority of total budgetary spending last year. A politically viable fiscal package will likely lead to wider deficits in the near term, and at the same time it won't provide a meaningful fiscal boost to the economy, said Michael Zezas, a strategist at Morgan Stanley, in a note published last week. Anne Walsh, chief investment officer at Guggenheim Partners Investment Management said that without a real process in Washington aimed at significantly resetting spending levels, a meaningful improvement in the US fiscal path is unlikely. "This is an unsustainable course that we're on," she said.
Yahoo
18-05-2025
- Business
- Yahoo
Analysis-Moody's downgrade intensifies investor worry about US fiscal path
By Davide Barbuscia NEW YORK (Reuters) -A U.S. sovereign downgrade by Moody's has exacerbated investor worries about a looming debt time-bomb that could spur bond market vigilantes who want to see more fiscal restraint from Washington. The ratings agency cut America's pristine sovereign credit rating by one notch on Friday, the last of the major ratings agencies to downgrade the country, citing concerns about the nation's growing $36 trillion debt pile. The move came as Republicans who control the House of Representatives and the Senate seek to approve a sweeping package of tax cuts, spending hikes and safety-net reductions, which could add trillions to the U.S. debt pile. Uncertainty over the final shape of the so-called "Big Beautiful Bill" has investors on edge even as optimism has emerged over trade. The bill failed to clear a key hurdle on Friday even as U.S. President Donald Trump called for unity around the legislation. "The bond market has been keeping a sharp eye on what transpires in Washington this year in particular," said Carol Schleif, chief market strategist at BMO Private Wealth, who said that Moody's downgrade may make investors more cautious. "As Congress debates the 'big, beautiful bill' the bond vigilantes will be keeping a sharp eye on making them toe a fiscally responsible line," she said, referring to bond investors who punish bad policy by making it prohibitively expensive for governments to borrow. The downgrade from Moody's, which follows similar moves from Fitch in 2023 and Standard & Poor's in 2011, will "eventually lead to higher borrowing costs for the public and private sector in the United States,' said Spencer Hakimian, founder of Tolou Capital Management in New York. Even so, the ratings cut was unlikely to trigger forced selling from funds that can only invest in top-rated securities, said Gennadiy Goldberg, head of U.S. rates strategy at TD Securities, as most funds revised guidelines after the S&P downgrade. "But we expect it to refocus the market's attention on fiscal policy and the bill currently being negotiated in Congress," Goldberg said. FOCUS ON BILL One question is how much pushback there will be in Congress over whether fiscal principles are being sacrificed, said Scott Clemons, chief investment strategist at Brown Brothers Harriman, adding that a bill that shows profligate spending could be a disincentive to add exposure to long-dated Treasuries. The Committee for a Responsible Federal Budget, a nonpartisan think tank, estimates the bill could add roughly $3.3 trillion to the country's debt by 2034 or around $5.2 trillion if policymakers extend temporary provisions. Moody's said on Friday successive administrations have failed to reverse the trend of higher fiscal deficits and interest costs, and it did not believe that material reductions in deficits will result from fiscal proposals under consideration. Concern shows up in market pricing. A recent increase in the 10-year Treasury term premium - a measure of the return investors demand for the risk of holding long-dated debt - is partly a sign of underlying fiscal worry in the market, said Anthony Woodside, head of fixed income strategy at Legal & General Investment Management America. Woodside said the market was "not assigning much credibility" to the deficit being brought down in a material way. Treasury Secretary Scott Bessent has said the administration is focused on containing benchmark 10-year yields. The yield, last seen at 4.44%, is about 17 basis points below where it was before Trump took office in January. "Certainly you could see a reaction in yields to a pretty substantial increase in the deficit at a time when we're already running pretty significant deficits," said Garrett Melson, portfolio strategist with Natixis Investment Managers Solutions. A White House spokesperson dismissed concerns around the bill. "The experts are wrong, just as they were about the impact of Trump's tariffs, which have yielded trillions in investments, record job growth, and no inflation," said Harrison Fields, special assistant to the President and principal deputy press secretary, in a statement. The White House characterized the Moody's downgrade as political. White House communications director Steven Cheung reacted to the move via a social media post on Friday, singling out Moody's economist, Mark Zandi, and calling him a political opponent of Trump. Zandi, who is chief economist at Moody's Analytics, a separate entity from the ratings agency, declined to comment. Some in the market believe the fiscal outlook will improve with the tax package compared to earlier expectations, due to tariff revenues and spending offsets. Barclays now estimates the cost of the bill to increase deficits by $2 trillion over the next 10 years compared to expectations of around $3.8 trillion before Trump took office. X FACTOR? Urgency is mounting as key deadlines approach. House Speaker Mike Johnson has said that he wants his chamber to pass the bill before the U.S. Memorial Day holiday on May 26, while Bessent has urged lawmakers to raise the federal government's debt limit by mid-July. The U.S. government reached its statutory borrowing limit in January and began employing "extraordinary measures" to keep it from breaching the cap. Bessent has indicated the government could hit the so-called X-date - when it runs out of cash to meet all its obligations - by August. Investor nervousness around the debt limit has started to show up. The average yield on Treasury bills due in August is higher than the yield of bills with adjacent maturities. While there is broad agreement within the Republican Party to extend Trump's 2017 tax cuts, there is a divide on how to achieve spending cuts that would help offset revenue loss. The room for manoeuvre on spending cuts is limited. Mandatory spending, including on social welfare programs that Trump has pledged not to touch, accounted for a vast majority of total budgetary spending last year. A politically viable fiscal package will likely lead to wider deficits in the near term, and at the same time it won't provide a meaningful fiscal boost to the economy, said Michael Zezas, a strategist at Morgan Stanley, in a note published last week. Anne Walsh, chief investment officer at Guggenheim Partners Investment Management said that without a real process in Washington aimed at significantly resetting spending levels, a meaningful improvement in the U.S. fiscal path is unlikely. "This is an unsustainable course that we're on," she said.
Bloomberg
16-05-2025
- Business
- Bloomberg
Equities Climb Despite Inflation Angst
Bloomberg Television brings you the latest news and analysis leading up to the final minutes and seconds before and after the closing bell on Wall Street. Today's guests are BMO Private Wealth Chief Market Strategist Carol Schleif, JPMorgan US Inflation Strategy Head Phoebe White, Seaport Research Partners Senior Analyst David Joyce, Bogg Bag Founder and CEO Kim Vaccarella, American Century Investments Multi-Asset Strategies CIO Richard Weiss, 22V Research Washington Policy Research Head Kim Wallace, PWC CTIO Matt Wood, WSL Strategic Retail CEO and Chief Shopper Wendy Liebmann, JLL Retail Advisory Services President Naveen Jaggi, Glowbar CEO and Founder Rachel Liverman (Source: Bloomberg)
The Star
13-05-2025
- Business
- The Star
S&P 500, Nasdaq end higher on soft inflation data
The Dow fell 269.67 points, or 0.64%, to 42,140.43, the S&P 500 gained 42.36 points, or 0.72%, to 5,886.55 and the Nasdaq gained 301.74 points, or 1.61%, to 19,010.09. NEW YORK: The S&P 500 and the Nasdaq closed higher on Tuesday for a second straight day after softer-than-expected inflation numbers added to investor optimism from Monday when the US and China announced a trade truce. The Dow fell, however, with its biggest drag a 17.8% slide in shares of UnitedHealth after the insurance bellwether suspended its annual forecast and its CEO stepped down. The S&P 500 closed with a year-to-date gain for the first time since late February after data showed that US consumer prices rebounded moderately in April, with headline inflation increasing 0.2% last month compared with economist estimates for a 0.3% increase and a 0.1% drop in March. The CPI climbed 2.3% in the 12 months through April, after advancing 2.4% in the 12-month period until March. "The sustainability of the carry-through from yesterday is positive. There was nothing in CPI to throw it off," said Carol Schleif, chief market strategist at BMO Private Wealth in Minneapolis. Schleif described Monday's improvement in US and China trade relations as going "from iceberg to 80 degrees spring day overnight" and said the 90-day pause on tariffs came in time for retailers to import goods to build up stocks for back-to-school and year-end holiday shopping. Monday's relief rally followed Washington and Beijing's agreement to dial back stringent reciprocal tariffs, signalling a joint effort to stave off a global economic downturn. The US will temporarily lower the extra tariffs it imposed on Chinese imports to 30% from 145% for three months, while Chinese duties on US imports will fall to 10% from 125% in the same period. After the tariff truce, multiple brokerages lowered their odds of a US recession. Traders leaned in to bets that the US Federal Reserve would hold off on lowering interest rates until September, while still anticipating two 25-basis-point cuts by year-end. After Tuesday's inflation reading and Monday's US-China trade detente, R. Burns McKinney, portfolio manager at NFJ Investment Group in Dallas, said, "It does give the Fed the ability to focus on the labor side of this dual mandate in the coming meetings." "If we don't see resurgent inflation and we get a little bit of certainty in trade policy between now and the end of the year, central bankers will resume their cutting cycle," said McKinney, "not because of economic weakness but because slowing inflation means the inflation-adjusted Fed fund rate is still restrictive, and there's room to lower." The Dow Jones Industrial Average fell 269.67 points, or 0.64%, to 42,140.43, the S&P 500 gained 42.36 points, or 0.72%, to 5,886.55 and the Nasdaq Composite gained 301.74 points, or 1.61%, to 19,010.09. Among the S&P 500's 11 major industry sectors, six advanced, with technology the biggest gainer, ending up 2.25% while healthcare was the biggest loser, down 2.97%. The S&P 500 and the Nasdaq have recovered losses since April 2 – or "Liberation Day" – when US President Donald Trump announced sweeping reciprocal tariffs. A 90-day pause announced on April 9 for countries other than China, along with solid earnings reports and a limited US-UK trade agreement last week, helped the S&P 500 and the tech-heavy Nasdaq regain lost ground. Shares of crypto exchange operator Coinbase Global surged almost 24% after an announcement that it is slated to join the S&P 500 on May 19. With more than 90% of S&P 500 companies having reported earnings, numbers from retail giant Walmart will be on the radar later this week. Also, a number of Fed officials are scheduled to speak this week, including chair Jerome Powell on Thursday. Advancing issues outnumbered decliners by a 1.86-to-1 ratio on the NYSE where there were 189 new highs and 77 new lows. On the Nasdaq, 2,590 stocks rose and 1,904 fell as advancing issues outnumbered decliners by a 1.36-to-1 ratio. The S&P 500 posted 19 new 52-week highs and 6 new lows while the Nasdaq Composite recorded 75 new highs and 74 new lows. On US exchanges, 17.81 billion shares changed hands compared with the 16.51 billion moving average for the last 20 sessions. — Reuters
