BMO - Bank of Montreal

NYSE - NYSE Delayed Price. Currency in USD
+0.37 (+0.49%)
At close: 4:02PM EST
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Previous Close75.75
Bid74.90 x 900
Ask76.18 x 800
Day's Range75.67 - 76.19
52 Week Range62.79 - 79.35
Avg. Volume607,569
Market Cap48.516B
Beta (3Y Monthly)1.10
PE Ratio (TTM)12.39
EPS (TTM)6.14
Earnings DateN/A
Forward Dividend & Yield3.13 (4.13%)
Ex-Dividend Date2019-10-31
1y Target Est85.95
  • Financial Times

    Are ‘dividend hero’ trusts still the investor’s champion?

    Investing for income has never been more challenging. Investment trusts are one source of income that is proving resilient, say advisers. This allows them to build up reserves of capital in years of strong corporate dividend growth which can be used to maintain steady income payments to investors when corporate profits are under pressure.

  • CNW Group

    Bank of Montreal Announces Results of Conversion Privilege of Non-Cumulative 5-Year Rate Reset Class B Preferred Shares, Series 31

    Bank of Montreal Announces Results of Conversion Privilege of Non-Cumulative 5-Year Rate Reset Class B Preferred Shares, Series 31

  • Bloomberg

    Fed Plans Longer Repo Actions to Mitigate Year-End Market Risks

    (Bloomberg) -- The Federal Reserve Bank of New York announced plans to conduct repurchase-agreement operations within the coming month that have longer terms than those it has done previously.It will now conduct two operations each with terms of 42 days, the New York Fed said on its website. One of these will have a maximum size of at least $25 billion and the other $15 billion. The bank is also planning a $15 billion 28-day operation as well as a series of actions with terms of 13, 14 and 15 days, tenors it has used previously.The new longer operations “are intended to help offset the reserve effects of sharp increases in non-reserve liabilities later this year and ensure that the supply of reserves remains ample during the period through year end,” the New York Fed said in a statement. “They are also intended to mitigate the risk of money market pressures that could adversely affect policy implementation.”The schedule released by the Fed includes term operations to take place between Nov. 19 and Dec. 12. The decision to implement some operations with longer terms will allow some funding to carry past the turn of the year, which some have cited as a potential crunch point for funding markets.“The longer dated maturities will offer an early glimpse of year-end cash demand,” BMO strategists Jon Hill, Ben Jeffery and Ian Lyngen wrote in a note to clients.The central bank has been injecting liquidity into the funding markets since Sept. 17, when the rate on overnight general collateral repo jumped to 10% from around 2%. The Fed also started buying Treasury bills last month to add reserves into the system.The size of daily overnight operations will be maintained at $120 billion.The Fed also released on Thursday schedules for its planned monthly secondary Treasury reinvestment and reserve management purchases. The central bank plans to buy $60 billion of T-bills for its reserve management program from Nov. 15 to Dec. 6. This is in line with what it has already been doing. The Fed also plans to buy about $20 billion of Treasuries weighted across different maturities as part of its reinvestment operations.(Updates with comment from New York Fed.)To contact the reporter on this story: Alexandra Harris in New York at aharris48@bloomberg.netTo contact the editors responsible for this story: Paul Dobson at, Benjamin PurvisFor more articles like this, please visit us at©2019 Bloomberg L.P.

  • CNW Group

    BMO Private Banking Receives Three Best Private Bank Awards by Global Finance Magazine

    BMO Private Banking Receives Three Best Private Bank Awards by Global Finance Magazine

  • PR Newswire

    MicroSectors Launches 1x FANG+ Technology Exchange Traded Product on NYSE Arca

    NEW YORK, Nov. 13, 2019 /PRNewswire/ - REX Shares, LLC (REX) will add to the MicroSectors™ lineup with the launch of the 1x Exchange Traded Notes linked to the NYSE FANG+™ Index (the Index), which will be issued by Bank of Montreal (BMO.TO)(BMO). The 1x exchange traded note will complement the existing FANG+ ETNs, which currently offer investors from +3x through ‐3x daily resetting leveraged and inverse leveraged exposure. The 1x MicroSectors™ FANG+™ Exchange Traded Notes (symbol:FNGS) (the ETN), started trading November 13, 2019 on NYSE Arca.

  • What's in Store for Helmerich & Payne (HP) in Q4 Earnings?

    What's in Store for Helmerich & Payne (HP) in Q4 Earnings?

    Helmerich & Payne's (HP) much popular technologically-advanced FlexRigs with strong daily rate margins might reflect on segmental profits in the to-be-reported results.

  • What's in the Cards for Aurora Cannabis (ACB) in Q1 Earnings?

    What's in the Cards for Aurora Cannabis (ACB) in Q1 Earnings?

    Aurora Cannabis' (ACB) Q1 earnings are likely to reflect cannabis revenue growth and improved gross margin.

  • CNW Group

    A Canadian Banking First: BMO Introduces New Automated, Digital Solution to put Customers in Control of Bill Payments

    BMO QuickPay provides everyday banking customers with a frictionless way to pay their bills, while also putting them in complete control of the payment from start to finish. "We're continually looking for opportunities to deliver digital solutions that empower customers," said Brett Pitts , Chief Digital Officer, BMO Financial Group. "With BMO QuickPay, we leveraged machine learning capabilities to introduce a consumer friendly solution that will help do away with late bill payments.

  • What's in Store for Aurora Cannabis' (ACB) Q1 Earnings?

    What's in Store for Aurora Cannabis' (ACB) Q1 Earnings?

    Solid prospects in the Canadian and international markets are expected to have driven Aurora Cannabis' (ACB) fiscal first-quarter performance.

  • Mitsubishi UFJ (MUFG) to Post Q2 Earnings: What's in Store?

    Mitsubishi UFJ (MUFG) to Post Q2 Earnings: What's in Store?

    Mitsubishi UFJ Financial Group's (MUFG) interim results for fiscal 2019 are expected to reflect higher expenses related to investments and fall in interest income.

  • UBS-Banco do Brasil Partner for Investment Banking Services

    UBS-Banco do Brasil Partner for Investment Banking Services

    UBS Group (UBS) enters into partnership with Banco do Brasil in order to strengthen position in Brazil and benefit from latter's capital markets distribution platform.

  • PR Newswire

    Media Advisory - BMO Financial Group to Announce its Fourth Quarter 2019 Results

    TORONTO , Nov. 7, 2019 /PRNewswire/ -- BMO Financial Group will announce its fourth quarter 2019 financial results and hold its investor community conference call on December 3, 2019 . Financial results ...

  • CNW Group

    BMO Wins Aite Group's 2019 Cash Management and Payments Innovation Award for Digital Channel Capabilities

    BMO Wins Aite Group's 2019 Cash Management and Payments Innovation Award for Digital Channel Capabilities

  • CNW Group

    BMO, United Way and City of Toronto Announce Greater Golden Mile Neighbourhoods are First for Economic Opportunity Program

    BMO, United Way and City of Toronto Announce Greater Golden Mile Neighbourhoods are First for Economic Opportunity Program

  • De Beers Cuts Diamond Prices by About 5% as Industry Crisis Deepens

    De Beers Cuts Diamond Prices by About 5% as Industry Crisis Deepens

    (Bloomberg) -- De Beers is taking more drastic steps to stem the crisis in the diamond industry by cutting prices across the board for the first time in years.The company, the world’s biggest diamond producer, lowered prices by about 5% at its November sale, according to people familiar with the matter, who asked not to be identified as the information is private.The move is aimed at helping improve profits for the middlemen of the diamond industry, a group of traders and polishers that buy rough gems from De Beers. Many of these customers, which includes family-run traders in Belgium, Israel and India, as well as the subsidiaries of Tiffany & Co. and Graff Diamonds, are running on wafer-thin profit margins because of low prices and an oversupply of polished gems."De Beers is a price setter and has not made any price cuts thus far, despite the open market price for rough diamonds falling by about 9% year-to-date," said Edward Sterck, an analyst at BMO Capital Markets. "The most important market participant finally taking action after holding out for so long feels like a fairly typical indication that things may be about to improve."The price cut is unlikely to trickle down to the retail market and consumers shouldn’t expect to see diamond prices getting cheaper anytime soon.Part of the problem in the diamond industry is that prices have stagnated as other luxury offerings, like shoes, handbags and resort vacations, crowd the field. It’s also harder for diamond trading companies to find financing because banks are abandoning the sector after being hit by frauds and bad loans.Still, De Beers has insisted that the current weakness doesn’t mean demand has softened. Last week, the company released data that showed demand for diamond jewelry rose 2.4% last year. In the U.S. market, where almost half of all diamonds are sold, the increase was 4.5%.The Elite Club That Rules the Diamond World Is Showing CracksDe Beers sells its gems through 10 sales each year in Botswana’s capital of Gaborone, and the buyers -- known as “sightholders” -- have to accept the price and the quantities they’re offered. It’s a system that originated in the 1890s and is designed to benefit both miner and customer, who receives the diamonds at a discounted rate. But the discount has been shrinking. Some sightholders now struggle to make money from a business that was once highly lucrative.De Beers has offered its buyers more flexibility about their purchases, but it hasn’t been enough. The company made less than $300 million in each of the past three sales, which is the lowest in data going back to 2016.The November sales data, due next week, could indicate whether the price cuts are helping drive demand.Anglo American Plc, which owns De Beers, closed up 1.8% at 2,080 pence in London on Monday.(Updates with analyst quote in fourth paragraph.)To contact the reporter on this story: Thomas Biesheuvel in London at tbiesheuvel@bloomberg.netTo contact the editors responsible for this story: Lynn Thomasson at, Nicholas LarkinFor more articles like this, please visit us at©2019 Bloomberg L.P.

  • Itau Unibanco (ITUB) Inks Deal to Acquire Zup IT Servicos

    Itau Unibanco (ITUB) Inks Deal to Acquire Zup IT Servicos

    Itau Unibanco's (ITUB) decision to acquire Zup will enable it to better serve customers with improved digital capabilities.

  • CNW Group

    BMO Asset Management Inc. Announces Final Valuation and Declares Final Distribution on Units of Three Terminated BMO Exchange Traded Funds

    TORONTO , Nov. 1, 2019 /CNW/ - BMO Asset Management Inc. (the "Manager"), today announced the final net asset values for each of BMO Global Banks Hedged to CAD Index ETF (BANK.TO), BMO Global Insurance Hedged to CAD Index ETF (INSR.TO) and BMO Shiller Select US Index ETF (ZEUS.TO) (each a "Fund" and collectively, the "Funds"). The units of the Funds were previously de-listed, at the request of the Manager, from the Toronto Stock Exchange effective close of business on October 29, 2019 .

  • CNW Group

    BMO to Appoint George Cope as Chair of the Board

    TORONTO , Nov. 1, 2019 /CNW/ - BMO Financial Group (BMO.TO)(BMO) announced its intention to appoint George A. Cope as Chair of the Board upon his re-election as an independent director at BMO's Annual Meeting on March 31, 2020 . BMO Chair J. Robert S. Prichard will retire from the board at that time after 20 years of service as an independent director and as Chair since 2012. "George's distinguished record as a public company chief executive and reputation as a strategic leader committed to innovation, growth and good governance make him the ideal Chair to take the board forward," said Mr. Prichard.

  • BMO or WBK: Which Is the Better Value Stock Right Now?

    BMO or WBK: Which Is the Better Value Stock Right Now?

    BMO vs. WBK: Which Stock Is the Better Value Option?

  • Fed Cuts Rates a Quarter Point, Powell Says Policy in Good Place

    Fed Cuts Rates a Quarter Point, Powell Says Policy in Good Place

    (Bloomberg) -- Explore what’s moving the global economy in the new season of the Stephanomics podcast. Subscribe via Pocket Cast or iTunes.Federal Reserve officials reduced interest rates by a quarter-percentage point for the third time this year and signaled a pause in further cuts unless the economic outlook changes materially.The Federal Open Market Committee altered language in its statement following the two-day meeting Wednesday, dropping its pledge to “act as appropriate to sustain the expansion,” while adding a promise to monitor data as it “assesses the appropriate path of the target range for the federal funds rate.”“We believe monetary policy is in a good place,” Fed Chairman Jerome Powell said at a news conference following the decision. “We see the current stance of policy as likely to remain appropriate as long as incoming information about the economy remains broadly consistent with our outlook.”As with the September statement, the FOMC cited the implications of global developments in deciding to lower the target range for the central bank’s benchmark rate to 1.5% to 1.75%. Powell also noted in the press conference that the risks associated with trade tensions and Brexit show signs of improving.Prolonged Hold“His comments suggest the Fed is on hold for some time until something changes their outlook,” said Jennifer Lee, a senior economist at BMO Capital Markets in Toronto. “He’s still being quite optimistic, I think, particularly about the household sector. That suggests to me the Fed is quite comfortable with what they’ve done so far.”Ten-year Treasury yields fell to 1.77% from 1.80% earlier and the U.S. dollar gained. Traders pared bets on a fourth consecutive rate cut in December.Treasuries had initially weakened on the Fed’s announcement, but then took heart after Powell signaled that there was a high bar to raising rates because inflation remains muted. U.S. stocks advanced late in the session to an all-time high.“We would need to see a really significant move up in inflation that’s persistent before we would consider raising rates to address inflation concerns,” Powell said.While lower rates do little to combat the uncertain trade picture, unemployment has continued to drop, consumer spending has remained solid and more-affordable mortgages have revived the housing market.“What we’ve had is an economy where the consumer is really driving growth,” Powell said. “Overall, we see the economy as having been resilient to the winds that have been blowing this year.”What Our Economists Say“The October FOMC post-meeting communique proffered the possibility of additional policy easing, but dialed back the degree of certainty through subtle language changes. This is consistent with Bloomberg Economics’ expectation that officials would aim to preserve optionality around upcoming meetings, even though we expect tepid economic data to ultimately compel the Fed to act.”\-- Carl Riccadonna, Andrew Husby and Eliza Winger. To see the full note, click hereHours before the decision, the Commerce Department reported the economy grew at a 1.9% annualized pace in the third quarter, exceeding estimates. Better-than-expected consumer spending was partly offset by weakness in business investment.The Fed’s cuts have also calmed markets compared with the beginning of the year when investors grew nervous that monetary policy was too tight. Pricing in fed funds futures implies investors don’t fully expect another reduction until well into 2020.The same cannot be said for President Donald Trump, who has repeatedly attacked the Fed. He complained on Tuesday that it “doesn’t have a clue!” and has called on Powell to slash rates to zero while tweeting favorably about negative rates applied by central banks in Europe and Japan.Dissenting VotesAs with the past two cuts, Kansas City Fed President Esther George and Boston’s Eric Rosengren dissented, preferring to keep rates unchanged.The FOMC didn’t release a new set of economic forecasts and rate projections at this meeting, so it’s unclear how many non-voters on the committee had also penciled in a reduction.The statement again highlighted the essentially positive condition of the U.S. economy. With unemployment at a half-century low, officials continued to describe the labor market as “strong,” job gains as “solid” and household spending as rising at a “strong pace.”Uncertainties RemainAt the same time, they repeated a reference to “uncertainties” in the economic outlook. Officials also made a minor change to say business fixed investment and exports “remain weak.” The prior statement had said that they weakened.That softness has shown up in data from the manufacturing sector this year, though factory output rose slightly in the third quarter.Fed officials have been watching for signs that weakness in manufacturing and faltering confidence in the business sector might threaten consumer spending, particularly if the job market cools. The Labor Department will release its October employment report on Friday.(Updates with stock market reaction in seventh paragraph.)\--With assistance from Emily Barrett, Ben Holland, Sophie Caronello, Vince Golle, Reade Pickert, Katia Dmitrieva and Enda Curran.To contact the reporters on this story: Christopher Condon in Washington at;Steve Matthews in Washington at smatthews@bloomberg.netTo contact the editors responsible for this story: Alister Bull at, ;Margaret Collins at, Scott Lanman, Jeff KearnsFor more articles like this, please visit us at©2019 Bloomberg L.P.

  • For Bond Traders and the Fed, Boring Is Beautiful

    For Bond Traders and the Fed, Boring Is Beautiful

    (Bloomberg Opinion) -- I wouldn’t be surprised if Federal Reserve Chair Jerome Powell was all smiles as he watched the financial markets move in the minutes after the central bank’s interest-rate decision on Wednesday.Heading into this week, the bond-market consensus was that the Fed would deliver its strongest “hawkish cut” yet — acquiescing once again to futures pricing but strongly suggesting that its “mid-cycle adjustment” in policy is complete. That’s exactly what happened. The Fed cut its benchmark lending rate by a quarter-point for the third time since July, to a range of 1.5% to 1.75%, and lowered the interest rate on excess reserves by the same amount, to 1.55%. In a sign of just how ready bond traders were for this move, two-year Treasury yields barely budged from about 1.625%, the precise midpoint of the new target range, in the half hour before Powell began speaking.The most important part of the Federal Open Market Committee’s statement was that it removed the phrase that policy makers would “act as appropriate” to sustain the economic expansion. “That has been the signaling language to tip the hand that we’re moving rates; you take it out to tell the market that we’re done,” Jeffrey Rosenberg at BlackRock Inc. said. Sure enough, odds of another interest-rate cut at the central bank’s December meeting barely budged.Powell hammered home that point in his opening statement at his press conference: “We believe monetary policy is in a good place,” he said, using a phrase he normally employs to talk about the U.S. economy, not the level of interest rates. The current stance is “likely to remain appropriate,” he said. In response to a question by Bloomberg’s Michael McKee about what it would take to ease again, he said a “material reassessment of our outlook.” As for going the other way? “We're not thinking of raising rates right now.”This is about as close to a hard stop as could reasonably be expected from the Fed after three consecutive interest-rate cuts. And, compared with recent history, Powell appeared determined to stick to script (often literally — he read back from his opening statement during the question-and-answer portion as much as ever). That’s in contrast with his other attempts to thread the needle of easing monetary policy while sounding optimistic about the economic outlook. He seemed to just want to undo the December 2018 rate hike in July but was quick to suggest the Fed could drop rates further after hearing the stock market was tumbling. In September, sharp dissent among the ranks of the FOMC reflected an unease with back-to-back rate cuts. While Kansas City Fed President Esther George and Boston Fed President Eric Rosengren dissented for the third consecutive time, in favor of no rate move, there was no argument from St. Louis Fed President James Bullard for dropping the fed funds rate further. He advocated for a 50-basis-point reduction at the September meeting. Judging by the “dot plot,” which wasn’t updated this time, it seems as if Powell speaks for the entirety of the central bank in saying that interest rates are now in a good place.“In short, a clean hawkish cut,” said Jon Hill at BMO Capital Markets. The yield curve flattened a bit, but relative to August’s inversion, the 16 basis point spread between two- and 10-year Treasuries feels like a massive buffer. That shouldn’t be especially worrisome to Fed officials. Powell also discussed the funding markets after the Fed’s announcement earlier this month that it would begin buying $60 billion of Treasury bills a month to keep control over short-term interest rates. As he has before, Powell emphasized that the purchases are not the same as post-crisis quantitative easing but rather a more technical move by the central bank. The Fed’s balance sheet has increased by about $200 billion since the mid-September repo meltdown, to almost $4 trillion.As I wrote earlier this week, it seems as if the Fed is ready for a break, and it looks as if bond traders will allow it. The economic data released in the hours before the interest-rate decision affirmed the central bank’s outlook for “moderate growth.” Third-quarter real gross domestic product growth was 1.9%, beating the consensus forecast of 1.6%. If there are no revisions, growth would need to be just 1.6% in the final three months of the year to meet the Fed’s 2019 forecast for 2.2%.None of those figures are particularly riveting, even if President Donald Trump tweeted “The Greatest Economy in American History!” But for bond traders and Fed officials alike, boring is beautiful.As Powell said, it’s too soon to say whether the central bank has achieved the fabled “soft landing.” But short-term interest rates are now down 75 basis points in about 90 days. As he also said, that’s “a very substantial shift.” The Fed is right to let its swift actions filter through into the economy before assuming it needs to do anything more.To contact the author of this story: Brian Chappatta at bchappatta1@bloomberg.netTo contact the editor responsible for this story: Daniel Niemi at dniemi1@bloomberg.netThis column does not necessarily reflect the opinion of the editorial board or Bloomberg LP and its owners.Brian Chappatta is a Bloomberg Opinion columnist covering debt markets. He previously covered bonds for Bloomberg News. He is also a CFA charterholder.For more articles like this, please visit us at©2019 Bloomberg L.P.

  • Bank of Canada Considers Insurance Rate Cut, But Rejects It For Now

    Bank of Canada Considers Insurance Rate Cut, But Rejects It For Now

    (Bloomberg) -- Explore what’s moving the global economy in the new season of the Stephanomics podcast. Subscribe via Pocket Cast or iTunes.Bank of Canada Governor Stephen Poloz, one of the few central bankers to resist the global push toward easier monetary policy, acknowledged he’s begun to consider the merits of joining other countries in lowering borrowing costsAt a press conference after the Bank of Canada’s decision to keep the current 1.75% policy interest rate unchanged for an eighth straight meeting, Poloz said his governing council discussed the possibility of implementing an “insurance” cut to counter global economic headwinds, but decided against it because of the potential costs to such a move. These include driving up inflation already at the central bank’s 2% target, and fueling household debt levels that are among the highest in the world.“Governing Council considered whether the downside risks to the Canadian economy were sufficient at this time to warrant a more accommodative monetary policy as a form of insurance against those risks, and we concluded that they were not,” Poloz said. The Bank of Canada “is mindful that the resilience of Canada’s economy will be increasingly tested as trade conflicts and uncertainty persist.”While the decision to remain on hold for now will cement Poloz’s status as an outlier, markets will interpret his comments about an insurance cut as an attempt to lay the groundwork for a future move if the domestic economy deteriorates. Earlier, the central bank released a rate statement that was more dovish than other recent communications, along with a set of reduced growth forecasts.Market ReactionCanada’s currency fell as much as 0.8% after the decision, the most in almost a month, trading at C$1.3178 against the U.S. dollar at 12:11 p.m. Toronto time. Two-year government bond yields dropped 13 basis points to 1.58%. Investors are assigning a 75% chance of a quarter-point cut in the next 12 months, versus less than a 50% chance before the statement.“The Bank of Canada held its target overnight rate unchanged, as expected, but with a slightly more dovish tilt,” Brett House, deputy chief economist at Scotiabank, said by email. “While not entirely setting up a cut at its next meeting, this leaves open the door a bit further for a December cut.” The next rate decision is on Dec. 4.Doug Porter, chief economist at Bank of Montreal, said in a note to investors that the Bank of Canada appears to have adopted a “bias to cut rates, and we may be just one more serious global trade accident away from them acting on the bias.”By holding steady, Canada will be left with the highest policy rate among advanced economies if the Federal Reserve cuts later Wednesday, as expected. That raises the question of whether the northern nation’s economy is truly strong enough to justify the distinction.The Bank of Canada is bullish on consumption and housing -- which are being fueled by a robust labor market. Wage gains are accelerating, now hovering at around 3%, a level consistent with an economy at full capacity. Global financial conditions meanwhile have eased, helping offset the impact of growing trade uncertainty, officials said Wednesday.Another source of future growth, meanwhile, could be additional stimulus from Prime Minister Justin Trudeau’s re-elected Liberal government, which has promised to implement new spending and tax cuts next year. The central bank is projecting inflation will remain at the 2% target over the projection horizon, and expects the nation’s “modest” levels of economic slack -- primarily in oil-producing regions -- will dissipate.“We will pay close attention to the sources of resilience in the Canadian economy, notably consumer spending and housing activity,” said Poloz. “We will also be watching for any changes to fiscal policy at the federal level now that the election is behind us.”What Our Economist SaysThe statement and Monetary Policy Report “reinforces our view that the Bank of Canada is likely to make a modest downward adjustment to the policy rate by early 2020 -- or even as soon as December.”\--Andrew Husby, Bloomberg Economics (click here for the full note)At the same time, the central bank has clearly concluded the global trade tensions have become a serious threat to the nation’s feel-good story. The central bank on Wednesday highlighted the impact of trade conflicts and uncertainty on global growth which officials said is hurting business investment, exports and commodity prices, even with global monetary easing.The bank lowered its growth forecast for Canada to 1.7% next year, from a July estimate of 1.9%, and 1.8% in 2021 from a previous projection of 2%. It also forecast an outright decline in exports and business investment in the second half of this year, when growth is expected to average a sluggish 1.3%. As a result, the level of economic output will be “slightly lower” at the end of 2021 than predicted in July.Officials also noted -- in a rare reference to the Canadian dollar in a rate statement -- that “despite” lower commodity prices, the currency hasn’t weakened against the U.S. dollar and is actually stronger against other currencies. While Poloz chose to cite the costs of cutting in his opening statement, one of the negative consequences of the Bank of Canada holding rates steady has been to drive gains in the Canadian dollar -- the world’s best performing currency this year.(Updates with comments and details throughout.)\--With assistance from Erik Hertzberg and Shelly Hagan.To contact the reporter on this story: Theophilos Argitis in Ottawa at targitis@bloomberg.netTo contact the editors responsible for this story: Theophilos Argitis at, Chris Fournier, Stephen WicaryFor more articles like this, please visit us at©2019 Bloomberg L.P.

  • Dollar Looks Poised to Weather Fed Cuts and Recession Risk

    Dollar Looks Poised to Weather Fed Cuts and Recession Risk

    (Bloomberg) -- Investors are bracing for the dollar to keep appreciating through at least early 2020 even though the Federal Reserve looks poised to cut rates and the risk of a U.S. recession remains elevated.The dollar has already surprised investors by holding steady even after Fed reductions in July and September. Now, with the world’s growth outlook decidedly downbeat, Columbia Threadneedle Investments is positioning for the greenback to strengthen against the euro by more than many forecasters are predicting over the next three to six months.A trio of catalysts should support the dollar through the first quarter, according to Columbia Threadneedle’s Ed Al-Hussainy: U.S. rates exceed most other developed nations, domestic inflation is in a “better place” than Europe’s, and global growth expectations are being downgraded. The senior analyst says the $469 billion asset manager is prepared for the greenback to strengthen toward parity -- a level it hasn’t traded at since 2002 -- against the euro, from about $1.1090 currently, despite the common currency rallying 1.7% against it in October.Economic theory suggests the dollar should move in the same direction as interest rates, but reality shows that’s not always the case. At the moment, a mix of positive and negative U.S. data, along with occasional progress on trade and Brexit, are complicating Fed policy makers’ assessment of the economy as their two-day meeting in Washington gets underway. After Wednesday’s expected reduction, it’s unclear whether the central bank will cut rates again soon.“The theory that the dollar should be weakening, along with the Fed lowering rates, depends on whether the rest of the world is in a steady state, with no radical changes in policy being undertaken,” said Scott Kimball, a Miami-based bond portfolio manager whose team oversees $12 billion for BMO Global Asset Management.“Instead, it’s the exact opposite: Central banks are messing with policy in atypical ways and, in the midst of that, everyone is scrambling toward liquidity doors,” Kimball said by phone. “Negative rates overseas and weak currencies abroad are going to continue to drive people into positive rates and strong opportunities. There’s nothing we see that’s going to deter the dollar, even in these unusual times.”Kimball said he sees the greenback rising “for a painfully long time” as capital flows from around the world pour into the U.S. and global interest-rate policies drive investors into American bonds, which offer higher rates. As a result, he says he’s been buying more intermediate- and long-term corporate bonds.Overnight index swaps indicate that markets have priced in almost a full rate cut for Wednesday, and an additional reduction by September 2020.The Bloomberg Dollar Spot Index was little changed Tuesday after climbing 0.3% last week.The last time the dollar largely held onto its strength into a recession was before, during and after the 2001 downturn fueled by the Internet bubble’s collapse and the Sept. 11 terrorist attacks.That year, the Fed cut rates a total of 11 times in 25- and 50-basis-point increments, but the U.S. Dollar Index rose 6.6% from the end of 2000 through the end of 2001. At the time, the dollar appreciated sharply on perceived haven flows, even while the economy was sliding into recession and fundamentals were deteriorating, said Ben Randol, an FX strategist at Bank of America.The bank sees the dollar appreciating against most currencies except the yen into year-end. Though the greenback is overvalued, unresolved global tensions are one factor that “can keep it on a rising path,” Randol said. On the flip side, “a potentially less threatening global backdrop” could cause the dollar to weaken in 2020, he added.Granted, there are more than a few people suggesting the greenback may already be at or near its peak. Commerzbank’s Ulrich Leuchtmann and Scotiabank currency strategist Shaun Osborne say softer U.S. growth may help undermine the currency’s haven appeal.But even those awaiting a dollar bear market are having a hard time identifying when that might happen. Alessio de Longis, a New York-based multi-asset fund manager at Invesco, says it would take a sustainable rebound in growth outside the U.S., particularly in Europe and emerging markets, and “right now we’re not seeing that catalyst yet.” For the time being, he’s bullish on the Mexican and Colombian pesos and Brazilian real, and using the Swiss franc, Australian and New Zealand dollars as funding currencies.While a U.S. recession is hardly inevitable, the domestic data is on a “knife edge” and the “margin of safety in 2020 is eroding,” Al-Hussainy said via email. To support growth next year, it would take some combination of steady consumer spending, lower rates, a weaker dollar and fiscal stimulus in the U.S., Europe or China, he says.(Adds dollar gauge in ninth paragraph.)\--With assistance from Edward Bolingbroke.To contact the reporters on this story: Vivien Lou Chen in San Francisco at;Susanne Barton in New York at swalker33@bloomberg.netTo contact the editors responsible for this story: Benjamin Purvis at, Nick Baker, Mark TannenbaumFor more articles like this, please visit us at©2019 Bloomberg L.P.