You would never know that is the case reading their statement and answers at their press conference. Every monthly report on jobs gets the most attention from average hourly wages and work week-- all geared to detect any inflationary pressures from the labour side. This obsession needs to go away

Arthur the 100 hours capacity for work makes little sense for the denominator... 18 hour days?

Governments would like higher, not lower inflation. Higher inflation means greater tax revenues--- taxes are based on nominal income, not real income. So, higher inflation would reduce deficits.

Normal is a relative term when it comes to looking at interest rates. In the 1960s normal was inflation at 3%, 1 yr bonds at 5%, 10 yr bonds at 6% and real growth 6%. Normal today is inflation,

1 yr at 2.5 %, 10yr at 2.75% and real growth at 2%. Both times the economy is balanced with respect to inflation and unemployment ( a proxy for growth) Yet, i can recall in the 1960s bankers getting nervous that inflation was above 2%--- that target again-- and in Canada we put into place a Wages and Price Commission to report on whether wages or prices were getting out of line. The saving grace then was strong economic growth---- something we do not have now, hence this obsession with inflation. If growth were 5-6% would the Fed sweat about an inflation rate of 3%? I doubt it

We have lots of safety nets such as universal health care that can soften the blow.My sense is that housing will hold well because we are accepting 400k immigrants who need housing in 2019.

The Fed is also working against cutting rates because it will still do quantitative tightening to the tune of $50 billion a month until Sept--- that is, withdrawing about $350 billion from the money supply. In this regard, the Fed is behind a different curve in the sense it is too late to forestall a recession because it insists on tightening lending conditions.

The headache would be nowhere near the one we face now. A US president ticked off with Canada, so what?, Canadians have no respect for him. Right now some Canadians are unlawfully jailed in China and the Canadian govt is being sued by Meng for abuse of the law. Do we need this headache?

I wish the Canadian authorities, on the quiet, would have let Meng know about the pending arrest and given her a few hours to board a plane home. This would have saved a lot of a big political headache for the Trudeau govt.

Gary, you are too modest. You know a lot about Canada. Yes, an example of how conditions have changed can found in the banks. The TD and CIBC earnings fell short of expectations. In Canada the banks are very stable and are very predictable, so the shortfall is important to note. The shortfalls came principally from their capital market sectors which had a terrible 2018 4th quarter. Loan loss provisions were also upped considerably.

With the US-Canada 10yr spread 90bps, the BoC wishes that would narrow by the Canadas moving up. The economy and inflation would not support such a move up.

I find it hard to imagine that long bonds are used in repo markets because long duration means more volatility. It is safer to use short duration for collateralized loans

My belief is traditional...no inflation and the need for bonds by institutions leads to low term premia. I think Cashin is an example of a player who has hard time with flat yield curves but if he were to look at history there are many periods with flat curves