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28.05.26 - 19:09
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Bank Of Canada Warns Markets More Vulnerable To Sharp Correction Due To AI Concentration, Basis Trades (ZeroHedge)
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Bank Of Canada Warns Markets More Vulnerable To Sharp Correction Due To AI Concentration, Basis Trades
The Bank of Canada said the global financial system has functioned (surprisingly) well through recent global shocks, but underscored the risk of a sharp asset price correction as well as vulnerabilities related to the role hedge funds are playing in debt markets.
The central bank's 2026 financial stability report released Thursday noted financial asset valuations have continued to rise, while the stock market is increasingly concentrated in a handful of large tech companies that are heavily invested in artificial intelligence. That makes asset managers more vulnerable to a sudden correction, and a negative shock to AI sectors would have an outsized impact on broader stock indexes.
The central bank also reminded markets that the risk of basis trades remains front and center, warning that the increased role of hedge funds in overnight funding markets poses a vulnerability to the overall finan...
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29.04.26 - 16:48
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Bank of Canada Keeps Rates On Hold As It "Looks Through War′s Immediate Impact On Inflation" (ZeroHedge)
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Bank of Canada Keeps Rates On Hold As It "Looks Through War's Immediate Impact On Inflation"
As expected, the Bank of Canada - which was the day's first G5 central bank to hit the tape ahead of the Fed's decision at 2pm ET - held interest rates unchanged at 2.25% as expected, saying adjustments to borrowing costs would likely be small if the economy and inflation evolve as expected, while stating that it is looking through the war's immediate impact on inflation but will not let higher energy prices become persistent inflation.
“A policy rate close to current settings looks appropriate to support adjustment in the economy and return inflation to target,” BOC Governor Tif Macklem said adding that “There may still be a need to adjust the policy rate depending on how the risks evolve. But if the economy evolves broadly in line with the base case, changes in the policy rate can expected to be small."
At the same time, officials flagged major risks to their outlook, includ...
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27.04.26 - 07:48
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Fed, BOJ, Bank of Canada Expected to Hold Rates (Bloomberg)
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The Federal Reserve, Bank of Japan and Bank of Canada are expected to keep their rates unchanged this week as policymakers keep a hawkish eye on fallout from the Iran war. The Bank of England and European Central Bank are also likely to echo similar messages and hold rates. Bloomberg's Mark Cranfield breaks down the situation. (Source: Bloomberg)...
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