Category: Economy

CANADA FX DEBT-Canadian dollar falls as U.S.-China tensions threaten global outlook

 (Adds strategist quotes and details throughout, updates prices)
    * Canadian dollar declines 0.3% against the greenback
    * Price of U.S. oil increases 1.3%
    * Canada shed 226,700 nonfarm payroll jobs in April
    * Canadian bond yields were mixed across a flatter curve

    By Fergal Smith
    TORONTO, May 21 (Reuters) - The Canadian dollar weakened
against its U.S. counterpart on Thursday as rising tensions
between the United States and China weighed on investor
sentiment, with the loonie paring some of this week's advance.
    Wall Street's main indexes eased from more than two-month
highs hit in the previous session as President Donald Trump said
the United States would react strongly if China imposes national
security laws for Hong Kong in response to last year's often
violent pro-democracy protests.             
    "There are increasing threats to global growth in the
deteriorating U.S.-China dialogue," said Adam Button, chief
currency analyst at ForexLive.
    Canada runs a current account deficit and is a major
exporter of commodities, including oil, so the loonie tends to
be sensitive to the global economic outlook. Investors also
worried about the pace of a recovery from a coronavirus-fueled
economic slump.    
    Bank of Canada Governor Stephen Poloz said the world was in
an era where interest rates were probably going to stay low and
would not go back to where they were 20 or 30 years ago.
            
    On Tuesday, the chief executive officer of Canada Mortgage
and Housing Corporation said that the national housing agency is
forecasting a decline in average house prices of as much as 18%
in the coming 12 months.
    "The dire forecast from the CMHC is causing some soul
searching in the Canadian dollar," Button said.
    The loonie          was trading 0.3% lower at 1.3944 to the
greenback, or 71.72 U.S. cents. The currency, which was up 1%
since the start of the week, traded in a range of 1.3891 to
1.3970.        
    The decline for the loonie coincided with payroll services
provider ADP reporting that Canada shed 226,700 nonfarm payroll
jobs in April, when efforts to contain the coronavirus outbreak
shut down much of the economy.             
    Canada's retail sales report for March is due on Friday.
    The price of oil, one of Canada's major exports, rose to its
highest since March, supported by lower U.S. crude inventories,
OPEC-led supply cuts and recovering demand. U.S. crude oil
futures        settled 1.3% higher at $33.92 a barrel.
                
    Canadian government bond yields were mixed across a flatter
yield curve, with the 2-year            rising 2.6 basis points
to 0.333%.

 (Reporting by Fergal Smith; editing by Jonathan Oatis and Grant
McCool)

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Limited fare gate access, masks recommended in new TransLink coronavirus initiatives

TransLink officials are introducing new measures on buses, SkyTrain, West Coast Express and SeaBus as part of their new coronavirus initiatives across the system.

One of the biggest changes will be limited fare gate access at some of the busiest SkyTrain stations. This will be to help manage the number of customers on the platform and getting on the trains.

At most of the stations, only one fare gate will be programmed to allow customers to enter the station. This may be increased to two gates if the station is really busy.

TransLink will also be installing two-metre spaced decals at some bus stops and stations to help guide customers.

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Officials are recommending commuters wear a non-medical mask or face covering while waiting or on board the system.

“Public Health and WorkSafeBC are working with transit agencies to ensure all reasonable steps are being taken to prevent the spread of COVID-19, however, it’s clear that maintaining a safe physical distance may not be possible in every situation. We recommend all passengers consider wearing a face covering while using public transit, especially during those instances where physical distancing may not be possible,” Dr. Bonnie Henry, B.C.’s provincial health officer, said in a release.

TransLink crews will also deploying cleaning staff to disinfect SkyTrain cars at high-traffic stations.

Disinfecting spray schedules will also be increased to twice per week in addition to daily cleaning.

TransLink also expects to restore service across all the systems to full capacity and will monitor passenger loads in order to deploy additional service at times where physical distancing is more difficult.

On May 8, TransLink suspended planned service reductions and the 1,500 layoff notices it was planning to hand out to members.

Last month, TransLink announced a projected budget shortfall of $570 million to $680 million this year.

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TREASURIES-Yields fall after first 20-year bond auction in decades

 (Recasts, adds 20-year auction results and analyst comments,
updates yields)
    CHICAGO, May 20 (Reuters) - U.S. Treasury yields slipped on
Wednesday after the first auction of 20-year bonds in decades
was met with "decent" demand.
    The benchmark 10-year yield was last down 2.9
basis points at 0.6818%, slightly below its level before the
sale results were announced and extending a decline from
Tuesday's late levels.
    For the first time since 1986, the U.S. Treasury sold $20
billion in 20-year bonds at a high yield of 1.22%. The
bid-to-cover ratio, a metric of overall demand, was 2.53.
Primary dealers, who must absorb any supply not bought by direct
and indirect buyers, took 24.6% of the deal.

    The market was shunning the new kid, according to Jim Vogel,
an interest rate strategist at FHN Financial in Memphis,
Tennessee,. 
    "It will likely take 3-4 months or a significantly steeper
curve to fold new (20-year bonds) better into the Treasury
complex...to where they're no longer just the kid brother of the
30-year (bonds)," he wrote in commentary following the auction.
    The auction was "pretty decent" even though there was a
small tail, said Subadra Rajappa, head of U.S. rates strategy,
Societe Generale in New York, referring to the slightly lower,
when-issued yield of 1.215% heading into the auction. 
    More 20-year bonds are coming as a total of $54 billion is
expected over three months. Rajappa said the question will be
"how much demand you're going to see on a consistent basis."
    The two-year U.S. Treasury yield, which typically
moves in step with interest rate expectations, was last down 1.2
basis points at 0.1613%.
    Bids submitted in a Wednesday morning overnight repurchase
agreement (repo) operation totaled $7 billion, according to the
New York Federal Reserve, which said it accepted all the bids.
  May 20 Wednesday 12:53PM New York / 1753 GMT
                               Price                  
                                                      
                                                      
                               Price        Current   Net
                                            Yield %   Change
                                                      (bps)
 Three-month bills             0.1225       0.1246    -0.004
 Six-month bills               0.1475       0.1497    -0.005
 Two-year note                 99-238/256   0.1613    -0.012
 Three-year note               99-194/256   0.2065    -0.014
 Five-year note                100-54/256   0.3319    -0.016
 Seven-year note               99-224/256   0.5183    -0.023
 10-year note                  99-116/256   0.6818    -0.029
 30-year bond                  96-48/256    1.4063    -0.030
                                                      
   DOLLAR SWAP SPREADS                                
                               Last (bps)   Net       
                                            Change    
                                            (bps)     
 U.S. 2-year dollar swap         8.50        -0.25    
 spread                                               
 U.S. 3-year dollar swap         5.25        -0.25    
 spread                                               
 U.S. 5-year dollar swap         3.00        -0.25    
 spread                                               
 U.S. 10-year dollar swap       -2.25         0.25    
 spread                                               
 U.S. 30-year dollar swap      -47.75         0.50    
 spread                                               
 

 (Reporting by Karen Pierog in Chicago; Editing by Alden Bentley
and Leslie Adler)

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Most JGBs gain after solid 20-year debt auction

TOKYO, May 20 (Reuters) – Most Japanese government bond prices rose on Wednesday after a 20-year debt auction drew solid demand from dealers.

The bid-to-cover ratio, a gauge of demand, at the 900 billion yen ($8.35 billion) 20-year debt sale rose to 4.25 from 3.58 at the previous auction in April. Analysts said the demand was stronger than expected.

The auction’s tail, or gap between the average and lowest accepted prices, tightened to 0.06 from last month’s 0.11.

Benchmark 10-year JGB futures barely moved at 152.27, with a trading volume of 9,443 lots, and the 10-year JGB yield was flat at minus 0.005%.

The 20-year JGB yield fell 1.5 basis points to 0.330%. The 30-year JGB yield was down 2 basis points to 0.455%.

At the short end of the market, the two-year JGB yield and the five-year yield stood flat at minus 0.165% and minus 0.125%, respectively. ($1 = 107.7600 yen) (Reporting by Eimi Yamamitsu; Editing by Subhranshu Sahu)

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Economic recovery task force asks City of Penticton to relax patio regulations, remove permit costs amid COVID-19

The City of Penticton’s economic recovery task force is looking to city council for support to relax patio regulations and remove permit costs amid the novel coronavirus pandemic.

In a report to go before city council on Tuesday, economic development specialist Andrew Kemp says it is likely restaurants will only be able to open at half capacity, due to physical distancing guidelines, making it difficult to survive financially.

Kemp suggests the city should remove permit costs and relax design standards for storefront patios and sidewalk retail display areas to encourage businesses to take advantage of outdoor space.

“Utilizing outdoor space, where transmission of virus is much less of a concern, businesses may be able to increase the number of seats,” Kemp said in the report. “In addition, patios and sidewalk uses add vibrancy to the streetscape.”

The task force also recommends tackling property crime issues by promoting safety and security and supporting local bylaw officers and RCMP, as well as bolstering security of the industrial park through a Crime Prevention campaign and promoting recovery efforts through the “Love Local Penticton” campaign.

Slackwater Brewing is also asking for more flexibility when it comes to design regulations for patios. In a letter to council, co-founder Liam Peyton says the city’s building manager has informed him that the fencing around the patio is not in compliance with a local bylaw, even though it passed an occupancy inspection.

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The patio deck is made of cedar and the letter implies a material change would be required to meet current regulations.

“Encouraging patio and al fresco dining appears to be a pillar of Dr. Bonnie Henry’s post-COVID reality, so we feel it is important to maintain our patio, status quo, as a viable option for Penticton diners as relief from restrictions is now on the horizon,” Peyton said.

Also on Tuesday’s agenda, city council will consider sending a letter to B.C.’s attorney general, David Eby, in support of flexible liquor licensing regulations for businesses who are looking to expand their outdoor seating areas as B.C. begins its COVID-19 restart plan.

B.C. will enter phase two of its economic reopening plan on Tuesday, which includes restaurants, retail and personal service establishments. The businesses are allowed to reopen under strict health and safety protocols. Under phase two, people are still asked to stay close to home and avoid non-essential travel between communities.

Health and medical services, such as dentistry, physiotherapy and the re-scheduling of elective surgeries will also resume.

B.C. has no plans to resume large gatherings, including concerts, conferences or professional sports, until a vaccine is available. International travel and tourism will also remain restricted.

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MOVES-JPMorgan fills senior leadership roles after February makeover

LONDON, May 18 (Reuters) – JPMorgan has appointed Camillo Greco as co-head of investment banking industries coverage in Europe, Middle East and Africa (EMEA) as part of a number of changes in senior positions at the bank.

Greco will work alongside the other co-head of investment banking industries coverage Guillermo Baygual and will report to EMEA investment banking co-heads Dorothee Blessing and Conor Hillery, according to an internal memo seen by Reuters.

Baygual, meanwhile, will expand his responsibilities to become co-head of mergers and acquisitions (M&A) along with Dwayne Lysaght. Greco was head of consumer investment banking before his promotion.

The Wall Street bank has also named new leaders for its capital market and merger and acquisition (M&A)units, filling a series of top roles left vacant after a major leadership reshuffle in February.

These changes are intended to support a newly-launched committee of 18 global chairmen who are focusing purely on bringing in business and developing client relationships, according to a source with knowledge of the matter.

Aloke Gupte and Alex Watkins will become co-heads of equity capital markets in EMEA and Keith Canton will become global head of private placements.

Ben Thompson has been named head of leveraged finance capital markets for EMEA, while Marco Caggiano and Chris Roop will become co-heads of North America M&A.

Finally, Jared Kaye and John Purcell will become co-heads of investment banking coverage for the financial institutions group (FIG) sector in North America. (Reporting by Abhinav Ramnarayan; Editing by Emelia Sithole-Matarise)

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Thai Q1 GDP falls 1.8%, sharpest contraction in 8 years

BANGKOK (REUTERS) – Thailand’s economy contracted at its sharpest pace in eight years in the first quarter, but by less than expected, as the coronavirus outbreak hit tourism and domestic demand.

South-east Asia’s second-largest economy shrank 1.8 per cent in the January-March quarter from a year earlier, data showed on Monday (May 18), versus a 4.0 per cent decline forecast in a Reuters poll. The economy grew a downwardly revised 1.5 per cent in the December quarter.

On a quarterly basis, the economy shrank a seasonally adjusted 2.2 per cent in the March quarter, the National Economic and Social Development Council said, smaller than the forecast 4.5 per cent contraction projected by economists.

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The New Reality: Bubble between N.B. and P.E.I. ‘best bet’ for tourism industry, travel

This is the third in a series of stories looking at the new reality of life during the COVID-19 pandemic in the Maritimes. You can find the full series here. 

New Brunswickers may have just become comfortable with the idea of household bubbles but two Maritime premiers are looking to put a new spin on the concept, by becoming bubble provinces.

Household bubbles are a practice that allows two households to form a single unit and drop physical distancing restrictions.

Now, Prince Edward Island and New Brunswick are in discussions to open up travel between the two provinces.

“You know, we do need to begin to get some economic activity rolling in both provinces,” said P.E.I. Premier Dennis King. “We do seem to be on similar trajectories so it does seem to make sense at first blush at least that we would be able to work together with some kind of bubble province arrangement.”

New Brunswick Premier Blaine Higgs said that he and his P.E.I. counterpart have had “several discussions’ on the topic.

“We’re both tracking as we open up to see where things move,” Higgs said.

New Brunswick and P.E.I. have had similar experiences dealing with COVID-19.

Case counts in both provinces have remained below the per capita national average, both took early and decisive actions to limit travel across their borders and now, they each are looking to cautiously reopen in a bid to spur their stalled economies.

P.E.I. closed the Confederation Bridge to travellers on April 1. New Brunswick banned non-essential travel on March 25.

Since then case levels have flattened in both provinces. New Brunswick has 120 confirmed cases; P.E.I. has 27.

The situation is much different in the third Maritime province.

As of Friday, Nova Scotia has had more than 1,000 confirmed cases and over 50 deaths.

It’s a reality that has the province on the outs, while the other two discuss bubbling up.

“We’re going to continue to focus on ensuring that we flatten the curve here when it comes to COVID-19,” said Nova Scotia premier Stephen McNeil when asked about the prospect.

McNeil also noted that Nova Scotia never implemented the same level of border restrictions as New Brunswick and P.E.I.

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“We as a province have not locked down our province like our sister two provinces have,” he said.

“We’ve certainly restricted access, we’ve told Nova Scotians to go home and self-isolate, and we’ll continue to move along the path that we’re on and focus on the health and safety of Nova Scotians.”

People crossing the border into Nova Scotia are stopped, questioned and advised about the public health rules in the province, but conservation officers don’t have the authority to turn travellers away.

In New Brunswick, about 39 vehicles are turned away from the land border each day.

Opening up the Confederation Bridge to allow travel between New Brunswick and P.E.I. could be a boon for industries in both provinces.

“I think as we move forward to try to save something, as it were, out of this summer’s tourist season, I really do think that the regional travel possibilities are where our best bets lie,” Sheehan said.

What’s less clear is how much demand for travel there will be this summer.

Sheehan says there could be two camps of people: some who don’t feel comfortable travelling and others who will be highly motivated to travel as much as possible after a spring spent in lockdown.

“It’s one thing to lift the travel restrictions, it’s another thing to know that consumers in their own minds will feel comfortable travelling even if restrictions are limited,” he said.

“We would benefit greatly from allowing for some interprovincial travel that would support the industry perhaps to a level that would allow businesses to make it through the summer. It’s really a question if businesses can make it through the summer.”

Legal limits of Border Restrictions

When it comes to interprovincial travel, any restrictions imposed by provinces lie in sticky constitutional territory.

“What’s being done in response to the pandemic limits a whole series of charter rights,” said Wayne MacKay, professor emeritus at Dalhousie’s Schulich School of Law.

“But the critical question is whether or not it is a reasonable limit in a free and democratic society.”

Section 6 of Canada’s Charter of Rights and Freedoms enshrines Canadians rights “to move to and take up residence in any province” and “to pursue the gaining of a livelihood in any province.”

This sort of travel is technically allowed and considered essential by both New Brunswick and P.E.I.

However, there was at least one case where an Ontario man was charged with violating New Brunswick’s emergency order after arriving at the Moncton airport intending to move in with his parents. He was taken into custody after telling peace officers he was “visiting” his parents and refused to wait in a hotel until the next flight out.

According to MacKay, it’s unclear if Section 6 could apply to people visiting a province, but he believes provinces could justify the strict controls due to the nature of the pandemic.

“Likely when it is challenged I’d say there’s a very good chance that the courts are going to quite generous in terms of what are reasonable limits in a free and democratic society,” MacKay said.

“Basically the purpose is: do you have a good purpose for limiting and that is clearly there, the purpose of stopping the spread of COVID-19.”

But where there could be some dispute is if the rules are proportional.

“Are you doing the limitation in a way that is proportional, does it minimally impair, is it rationally connected to the goal you’re trying to pursue, and is it a balance kind of thing,” MacKay said.

“Is the pursuit of the purpose at least as valuable as the limitation on the right?”

When it comes to the possible exclusion of Nova Scotia, it appears New Brunswick and P.E.I. could be legally justified in doing so.

“There have been cases that clearly establish at the Supreme Court that discrimination between provinces is not an equality violation, that you can do things in relation to one province that you don’t do to the other,” MacKay said.

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Dr. Hinshaw to provide update on COVID-19 in Alberta Thursday afternoon

Alberta’s chief medical officer of health will provide her daily update on COVID-19 cases and the public health response on Thursday.

Dr. Deena Hinshaw is set to speak at 3:30 p.m. in Edmonton.

Global News will stream the news conference live in this article post.

Thursday marks the first day of Phase 1 of Alberta’s economic relaunch strategy.

In most of the province, as of May 14, retail businesses, cafes, restaurants, hair salons, barber shops and daycares can gradually reopen, with cleaning protocols and capacity limitations.

Alberta Biz Connect offers workplace guidance and supports to help businesses and non-profits affected by COVID-19 begin to reopen and resume operations safely.

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Phase 1 will be rolled out more gradually in Brooks and Calgary: on May 14, May 25 and June 1.

The premier explained Wednesday those two cities have 75 per cent of Alberta’s confirmed COVID-19 cases.

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City of Barrie, Ont., looking for feedback on coronavirus business recovery plan

The City of Barrie, Ont., is looking for feedback on its COVID-19 business recovery plan, which will help to guide local initiatives and economic investments to support Barrie businesses following the coronavirus lockdown.

“Feedback from our business community and residents will drive the development of the city’s COVID-19 business recovery action plan to ensure we’re addressing what businesses actually need from the city to help them recover,” Barrie Mayor Jeff Lehman said in a statement.

“We’re lucky in Barrie to have a strong, diverse business community and we look forward to working with them to develop creative solutions that will help advance our economic recovery.”


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