The markets feel like they are at an inflection point. The logic that has been driving prices during most of the pandemic is beginning to change. Markets have been looking past the pandemic for a while but now we are seeing some palpitations as the real economy begins to turn over and Covid cases continue to trend down dramatically around the world. Most asset prices are still at or near all time or recent highs (real estate, stocks, oil, fixed income, bitcoin, etc.) but financial assets are beginning to turn over. For example, for the last two days, technology stocks (the darlings of the pandemic economy) have been selling off and bitcoins are off their incredible highs. Yields are up, especially at the longer end of the curve. Inflation is hovering around the important 2% rate. All of that is happening on both sides of the border. And on both sides of the border, today, we will potentially get an indication about how central bankers feel about the current set of circumstances. Fed Chair Powell is up first in testimony before Congress mid morning. Governor Macklem gives a speech just after noon. The USD to CAD rate is flattish this morning but the Canadian dollar is at its strongest levels since early 2018. We expect a potentially volatile few days with lots of news flow and rapid changes in sentiment.
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