Launch Pad

Today

Help wanted. The Bank of Canada is beginning to look for a successor to Governor Tiff Macklem, whose seven-year term ends in June 2027, with Mark Carney expected to play a role in the selection given his experience leading both the BoC and BOE. Jean Boivin, currently head of the BlackRock Investment Institute and a former Bank of Canada deputy governor under Carney, is viewed as a leading candidate due to his central banking experience, private-sector background, and relationship with the PM. Other potential contenders include Scotiabank Chief Economist Jean-François Perrault, current Deputy Governor Nicolas Vincent, former Senior Deputy Governor Carolyn Wilkins, former Deputy Governor Paul Beaudry, and current Senior Deputy Governor Carolyn Rogers. The appointment could 7be historic, with the possibility of selecting the bank’s first francophone or female governor. The next governor will face a challenging economic environment including trade uncertainty, inflation risks, elevated government debt, and the growing economic impact of AI. 

The U.S. may be approaching peak political backlash against AI data centres following the Democratic midterm victories, according to some strategists. While AI data centres may face increased permitting requirements, higher development costs, and longer construction timelines, some believe this won’t significantly derail the AI buildout. The impact on 2027 capacity additions should be limited, as most projects are already under construction, while 2028 faces more risks given that a significant portion of planned capacity has yet to receive approvals. New regulations will likely require data centre operators to absorb more of their electricity and infrastructure costs, benefiting companies involved in power generation, transmission, grid equipment, and on-site energy solutions. Tighter restrictions should also increase the value of existing powered facilities and GPU capacity, leaving some investors to favour well-funded hyperscalers over smaller, debt-dependent operators. 

Recent market volatility has made it more difficult for macro hedge funds. Quick reversals across equities and fixed income markets over the last week have made it challenging to maintain profitable positions for these funds. Treasury markets have been especially challenging, with sudden shifts in interest rate expectations disrupting trend-following strategies, while equity hedge funds have reduced risk at their fastest pace in more than a decade just as stocks appear positioned for another rebound. These conditions are pressuring fund managers to reduce exposure and protect YTD performance, potentially amplifying market movements as liquidity and risk-taking capacity decline. 

Foreign investors withdrew nearly $50 bln from Asian equities in October, marking the largest monthly outflow since June, as concerns over AI infrastructure spending, profitability, and potential regulatory restrictions weighed on tech-heavy markets. Taiwan saw the largest outflows with $30.7 bln, its largest monthly withdrawal since at least 2008, while South Korea experienced $14.6 bln of outflows. Selling pressure has continued into November, with an additional $22.6 bln withdrawn across the region as investors reassess the sustainability of hyperscalers’ capex and the potential impact of tighter U.S. data centre regulations following the Democratic midterm victories. Asian equities underperformed global markets in October, with the MSCI Asia Pacific ex-Japan Index declining -6.9% compared with a -1.7% decline in the MSCI All Country World Index, as investors shifted towards U.S. equities and Treasuries. 

Household debt in the U.S. rose in Q3, with the New York Fed reporting a slight rise in delinquencies, although they noted that there was no significant deterioration in overall credit quality. Total household debt rose 1.8% to $19.1 tln, driven primarily by mortgage balances, which increased to $13.4 tln, while credit card debt rose to $1.3 tln and auto loans reached $1.7 tln. The share of debt experiencing some form of delinquency increased to 5% from 4.7%, although this remains consistent with pre-pandemic levels and well below those seen during the GFC. Student loans continue to show signs of stress following the resumption of payments after the pandemic, with balances more than 90 days overdue increasing to 10.9% from 10.6% in Q2. The Fed also noted that credit card delinquencies are now disproportionately affecting lower-income borrowers who gained access to credit under looser lending standards during the pandemic. 

Forget the ping-pong tables and free snacks. The latest workplace perk involves getting your hands dirty, literally. Companies including Spotify, Salesforce and PayPal are introducing desk plants, gardening kits and community gardens to help employees manage stress and improve morale. The idea has some research behind it. A Japanese study involving 63 office workers found that spending just three minutes looking at a desk plant during periods of fatigue helped reduce stress. Apparently, employees like the idea. One company’s gardening program was so popular that it doubled from 200 to 400 participants, while PayPal has gone a step further with a 56-bed community garden at its headquarters, complete with cooking classes using the produce grown by employees. Who knew the path to workplace happiness might involve a green thumb and a little dirt under your fingernails. 

Commodities

Gold declined for a third consecutive session yesterday, falling below $4,000 per ounce as U.S. inflation and hawkish Fed commentary strengthened expectations for further interest rate hikes. Spot gold fell as much as -1.6% during the session, bringing its three-day decline to -5%. Markets are now fully pricing in a 25 bp rate increase in December, with a probability of a 50 bp hike, creating pressure on non-interest-bearing assets such as gold. The two-year Treasury yield has increased 20 bps this week, while the U.S. dollar has strengthened, further reducing gold’s appeal. Some analysts now see potential downside toward $3,870 per ounce, especially if tomorrow’s U.S. PPI exceeds expectations and reinforces concerns about persistent inflation. Silver also declined -1% to $51.10, while copper futures on the London Metal Exchange declined as much as -1.2% to $13,657 per tonne before recovering slightly to $13,704, extending the pullback from September’s record high near $15,000. The recent correction in copper reflects growing uncertainty surrounding the sustainability of AI-related spending, renewed concerns about Nvidia, and potential U.S. import tariffs, which have contributed to weaker investor sentiment toward industrial metals. 

Oil prices rebounded this morning after Trump indicated that the U.S. does not need to reach an agreement with Iran, raising concerns that the ongoing Middle East conflict could remain unresolved and continue disrupting global energy markets. Brent crude futures climbed as much as 1.8% to exceed $94 per barrel, reversing earlier declines driven by signs of stronger oil production and exports from major suppliers in the Middle East. Trump’s comments are a shift from recent expectations of potential diplomatic progress, with the Trump now pushing for control over the Strait of Hormuz. On the supply side, Saudi Arabia reported a 26% increase in October oil production, reaching one of its highest monthly levels in years, while Iraq increased output to a new wartime high, helping alleviate concerns about immediate global supply shortages. However, some analysts warned that the resilience of Middle Eastern oil exports depends partly on continued U.S. military protection, including naval escorts for tankers, creating uncertainty about the sustainability and cost of maintaining these elevated shipment levels. Shipping risks are also continuing following reports of explosions involving two oil tankers near the Strait of Hormuz, while Ukrainian drone strikes on Russian refineries have added pressure to global diesel supplies. 

Fixed income and economics

The U.S. dollar climbed to its highest level since May 2025 yesterday as investors increased expectations for more Fed hikes following stronger-than-expected inflation data and hawkish commentary from policymakers. The Bloomberg Dollar Spot Index rose as much as 0.4%, extending its rally over the past two months, with the dollar strengthening against all major currencies. The Loonie declined -0.44%, while the euro reached an 18-month low against the dollar and the Japanese yen weakened -0.7%. The dollar’s recent rise came after October inflation data prompted markets to consider the possibility of a 50 bp rate increase in December or a faster pace of tightening. Continued inflation pressures stemming from the Iran war, tariffs, and AI-related infrastructure spending have all contributed to expectations for higher U.S. interest rates, making dollar-denominated assets more attractive to global investors. 

Household debt in the U.S. rose in Q3, with the New York Fed reporting a slight rise in delinquencies, although they noted that there was no significant deterioration in overall credit quality. Total household debt rose 1.8% to $19.1 tln, driven primarily by mortgage balances, which increased to $13.4 tln, while credit card debt rose to $1.3 tln and auto loans reached $1.7 tln. The share of debt experiencing some form of delinquency increased to 5% from 4.7%, although this remains consistent with pre-pandemic levels and well below those seen during the GFC. Student loans continue to show signs of stress following the resumption of payments after the pandemic, with balances more than 90 days overdue increasing to 10.9% from 10.6% in Q2. The Fed also noted that credit card delinquencies have disproportionately affected lower-income borrowers who gained access to credit under looser lending standards during the pandemic. 

Chart of the day

Markets