The IMF raised its global economic growth outlook for the first time in a year, forecasting GDP to expand 2.9% in 2023, 0.2% more than forecast last October. The updated figures would still signify a slowdown from a 3.4% expansion in 2022, however, the IMF said it expects growth will bottom out this year and accelerate to 3.1% in 2024. Risks to global growth include China’s recovery potentially stalling, the war in Ukraine escalating, more emerging and developing economies entering debt distress, and of course central banks’ interest-rate hikes. Even with these potential headwinds, the IMF sees world consumer-price increases slowing to 6.6% this year and inflation rates to be lower in about 84% of countries in 2023. 

Despite Vancouver and Toronto having the highest home prices, the loan-to-value ratios in those cities are the lowest in the country according to a Re/Max report. Loan-to-value ratios averaged 50% in Vancouver and 53% in Toronto as of Q3 2022, lower than the national average of 57%. The report also found that Regina and Edmonton had the highest loan-to-value ratios at 88% and 83%, respectively. Home prices have surged (until recently) in some of the biggest markets around the country, lowering loan-to-value ratios for homeowners' who owned before prices began to skyrocket (cold comfort for those who are looking to become homeowners now). Experts are warning that the ratios could drastically shift as well as borrowing costs rise, especially for those who opted for a variable mortgage when rates were ultra-low. 

High yield borrowers are busy refinancing debt after the biggest January rally in years. Companies are taking advantage of investor demand, as signs emerge that inflation is softening. Investors are also hoping that at the conclusion of the Fed’s meeting today, the central bank will slow the pace of its rate hikes, which would help push bond yields lower. Corporations have a lot of refinancing to do with high-yield issuers holding over $100 billion in bonds and about $330 billion in loans due through 2024. Some estimates are also showing that high yield bond sales to refinance debt, including floating-rate loans, could reach $135 billion in the U.S. this year, up from about $50 billion in 2022. Despite having to pay more interest on new debt, companies are seizing their opportunity now as volatility may creep up in the coming months. 

Employment costs in the U.S. rose at a slower-than-expected pace in the final months of 2022, reinforcing the case for a smaller interest-rate increase by the Fed today. The employment cost index increased 1% in Q4, less than the 1.1% economists estimated. Still, labour costs have risen at least 1% for six straight quarters, extending what was already a record streak going back to 1996. The data is consistent with other measures that show wage growth is slowing, though it still may not be enough for the Fed to feel confident that inflationary pressures have been stomped out for good. 

Hot off the press – Tom Brady is retiring, again. The GOAT (debate all you like) just announced his retirement via a twitter post, saying simply this time his retirement is “for good”. Brady spent 23 in the NFL with the Buccaneers and New England Patriots. The five-time Super Bowl MVP has piled up career records such as most touchdown passes (649) and most passing yards (89,214). He was also the most hated man by every fan of other AFC East teams between 2003 and 2019.  


Diversion: Really, first time on live TV? You’re a natural. 

India will spend less on a food subsidy program that feeds 800 million people after the government stopped providing some grain for free. According to Finance Minister Nirmala Sitharaman’s budget presentation, spending will be cut to 1.97 trillion rupees ($24 billion) in the new fiscal year starting April 1 from an estimated 2.87 trillion rupees this year. However, that’s still double the pre-pandemic level of about 1 trillion rupees. The reduction in food-subsidy spending comes as the government wants to shrink its overall budget deficit — seen as key to winning a higher credit score from ratings companies and preserving investor faith in the economy. 

Europe’s primary bond market has just finished its busiest month ever, with more than €292 billion ($318 billion) in sales. The surge in bond sales, which has not just been in Europe, has been driven by the growing appetite for risk of investors nearly a year after Russia’s invasion of Ukraine last February which effectively froze credit markets, especially for junk-rated companies. January has kicked off the year with optimism that inflation may have peaked, and also a milder European winter has curbed fears over a doomsday scenario of blackouts across the continent and deep economic recession. Remember how concerning natural gases shortages were a couple months ago. According to data compiled by Bloomberg, Sovereigns, supranationals and agencies (or broadly the public sector), accounted for around 44% of Europe’s issuance in January, followed by financial institution groups at 41%. The sales total beat the previous monthly record, from January 2020, by a whopping €54 billion.