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Daily Pulse

Canada

Delinquency rates in Canada climbed to the highest in two years as consumers added to credit card debt and auto loans took longer to pay off, according to Equifax Canada. The 90-day delinquency rate gained to 1.12% in the first quarter, up slightly from 1.08% in the same quarter a year earlier, the country’s largest credit reporting firm said Tuesday. Delinquencies rose the most among those 65 years old and over, while British Columbia and Ontario saw the first “significant” increase in arrears in half a decade, the firm said.

Quebec is ready to take more risks to support its companies. Investissement Quebec, the financing arm of the provincial government, will increasingly buy subordinated debt or take outright stakes in local businesses under a revamped mandate, according to Economy Minister Pierre Fitzgibbon. Support for Group Mach Inc.’s recent offer to buy tour operator Transat A.T., which has yet to be approved, illustrates the new strategy, he said.

United-States

President Donald Trump threatened to raise tariffs on China again if President Xi Jinping doesn’t meet with him at the upcoming Group of 20 summit in Japan. Trump told reporters at the White House on Monday that he could impose tariffs of 25%, or “much higher than 25%” on $300 billion in Chinese goods. “We’ve never gotten 10 cents from China and now we’re getting a lot of money from China,” the president said. Trump was asked in an interview with CNBC earlier in the day whether the additional tariffs would be enacted immediately if there’s no meeting at the summit later this month.

Oil rose amid estimates that U.S. crude inventories declined, tempering concerns that a drawn-out trade dispute between the world’s two largest economies is pressuring demand. Futures gained 1% in New York but remained below $54 a barrel after dropping 1.4% on Monday. U.S. stockpiles fell by 1.25 million barrels last week, according to a Bloomberg survey, which would be the biggest decline since early May if confirmed by official data on Wednesday.

Europe

Legendary investor Warren Buffett’s Berkshire Hathaway Inc. plans to issue its first deal in euros since 2017 at the same time it debuts in the pound market with a debt sale maturing in as much as 40 years. The Omaha-based company hired banks to manage a benchmark sale of 20 and 30-year bonds in euros, as well as a deal in pounds, according to person familiar with the matter, who is not authorized to speak publicly and asked not to be identified. The pound transaction would be the longest maturity in the U.K. currency since Northern Electric Finance Plc, a U.K.-based utility owned by Berkshire Hathaway, issued 150 million pounds ($190.6 million) of notes due in 2049 last month. Italian utility Enel SpA, Unilever Plc and EnBW International Finance are among corporates that have issued euro-denominated debt maturing in 20 years of more this year.

Asia

Yen bulls are keeping a close eye on the 2% level in 10-year Treasury yields. That’s the level that could begin to stem the flow of Japanese money abroad and ease one of the key factors weighing on the currency, according to Daisuke Karakama, chief market economist at Mizuho Bank Ltd. Yields may drop to 2% as markets price in an increased likelihood of Federal Reserve interest-rate cuts, he said. “Japanese outbound investment is set to decrease as their appetite will be sapped by so much expectation for rate cuts,” Tokyo-based Karakama said. “That makes it difficult to argue that yen weakening pressure will come from their outflows.”

Whether it’s a move to reassure the market or a small peace offering to the U.S., China’s central bank set its yuan fixing stronger than expected on Tuesday. The strong bias in the daily fix – which restricts the onshore yuan’s moves by 2% on either side – is the largest since Bloomberg started releasing the survey estimates in August 2017

The author

Michel Doucet

Michel Doucet

Vice-President and Portfolio Manager
After obtaining a Bachelor's degree from the Faculty of Social Sciences at the Université du Québec in Montréal and his Master’s degree, Michel Doucet began his career as a junior economist at the National Bank head office in Montreal. In 1992 he joined the institutional equities and fixed income group at Lévesque Beaubien Geoffrion as an economist and market analyst. Over the years, he has led various projects related to the North American and international economies as well as Canadian public finances. In 1996, the team of institutional economists to which he belongs was ranked first in Canada by Brendan Wood International. In August 1997, Mr. Doucet joined the personal services division of Lévesque Beaubien Geoffrion where he served as an economist, fixed income market analyst and vice president. In 2004, he joined the Desjardins Securities full service team as Vice President. He now occupies the roles of fixed income strategist, economist and portfolio manager. He manages the Securities Portfolio Advisory Group, advisor marketing and distribution of financial planning and insurance.