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Daily Pulse


Moody’s Investors Service upheld Canada’s top credit rating ahead of a fiscal update from Prime Minister Justin Trudeau’s government expected to show soaring debt. The country’s economic strength and “policy effectiveness” give it a “very high degree of resilience to shocks,” Moody’s analysts including William Foster said in a report Thursday that affirmed the Aaa rating with a stable outlook. Moody’s said historically low interest rates mitigate the impact of this year’s sharp rise in spending to counter the COVID-19 pandemic, which will produce the largest budget deficit since World War II. Finance Minister Chrystia Freeland is due to release updated government projections in coming weeks. Moody’s expects Canadian gross domestic product to contract by about 6% this year, followed by growth of 5 per cent and 3.5 per cent in 2021 and 2022, respectively. That’s a sharper decline this year but a swifter rebound than the median estimate in Bloomberg’s latest survey of economists.


Treasury Secretary Steve Mnuchin’s decision to allow several of the Fed’s emergency lending programs to expire on Dec. 31 will dramatically reduce the central bank’s ability to backstop the financial system. But people familiar with the situation say the Fed will still have considerable lending power in the event of a shock to the system. Mnuchin issued a letter Thursday saying he This link will open in a new tab. would not extend the Fed’s programs that used Congress’ CARES Act funds. Created in response to the financial panic that accompanied the lockdowns in the spring, those programs gave the Fed the ability to lend up to $4.5 trillion into various financial markets. Mnuchin argued it was the intent of Congress for the funds to expire.

This link will open in a new tab. Pfizer and This link will open in a new tab. BioNTech will apply for an emergency use authorization from the Food and Drug Administration for its coronavirus vaccine. Friday’s announcement came two days after Pfizer said a final data analysis found its coronavirus vaccine with BioNTech was 95% effective in preventing Covid-19, was safe and appeared to fend off severe disease. Pfizer is the first frontrunner in the Covid-19 vaccine race to apply for emergency use with the FDA. Its vaccine contains genetic material called messenger RNA, or mRNA, which scientists expect provokes the immune system to fight the virus. The vaccine requires a storage temperature of minus 94 degrees Fahrenheit, potentially posing challenges for widespread distribution. By comparison, This link will open in a new tab. Moderna’s vaccine must be stored at minus 4 degrees Fahrenheit.


German conglomerate Thyssenkrupp plans to cut another 5,000 jobs to stem losses across its sprawling empire, it said on Thursday, after reporting its operations were 1.6 billion euro ($1.9 billion) in the red in the latest financial year. Despite closing the sale of its elevators business in July for more than 17 billion euros to help fund restructuring and cut debt, the group remains in crisis and CEO Martina Merz said more painful restructuring will be needed to stop burning cash. The company said it expected to make a decision about what to do with its struggling steelmaking business in the spring of next year after the division swung to a loss of nearly a billion euros as the global slowdown from COVID-19 lockdowns hit demand.

Chief Brexit negotiators suspended direct talks on Thursday after a member of the EU team tested positive for COVID-19, but officials continued working remotely to clinch an EU-UK trade deal that would come into force in just six weeks. Finland’s European affairs minister, Tytti Tuppurainen, said the talks could still succeed and a “comprehensive” deal be agreed in time before Britain’s transition out of the European Union completes on Dec. 31. Some EU member states including the Netherlands, France, Belgium and Spain asked the executive European Commission – which is negotiating with Britain on behalf of the bloc – to update emergency plans for a possible no-deal Brexit.


A series of high-profile defaults involving state-owned companies in China – normally a safe pick for investors – have jolted the credit market and rattled investors, leading to last week’s bond market selloff. As the bleeding continues pointing to signs of more bond defaults ahead, observers are debating the questions of why more state-owned enterprises (SOEs) are being left in the cold this time compared to the past two decades and what segments of the market, if any, will the government choose to support. State-owned miner Yongcheng Coal and Electricity defaulted on a 1 billion yuan ($151.9 million) bond last week, This link will open in a new tab. triggering a broadened state investigation into three underwriting banks suspected of misconduct.

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.