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[music] >>hello I'm Greg Bonnell and welcome to MoneyTalk live presented by TD investing. I will be joining you with guest you only seen here. We will take you through what is moving markets and answer your questions about investing. Coming up on today's show. We will discuss the big take away from today's cooler than expected US inflation report with Hafiz Noordin program manager for global active fixed income to asset management. In today's WebBroker education statement will take us through data from today's blog. State you not at all is happening in the markets. Month over month, it was actually flat and year-over-year came in a little cooler than expected, sing a little bit of a rally in risk assets of course that includes equity here at home, 19,000 and a pretty solid one and 1/2%. Nursing a bit of a downdraft in crude prices. Right now just dancing on that 90 dollarr a barrel. And let's take a look at Air Canada which seems to be taking some gains today, and construct which ended up at 20% would you know when it comes to the airlines, their biggest fuel cost is fuel indeed. In terms of some of the energy names, there getting pulled down earlier in the session on that declining price of crude, coming off a bit low in the session and seems in the engine names have as well though Athabasca is one of the most heavily treated names of a street right now. And down a little more than a percent. The schedule the big show south of the border were deftly markets reaction to that later than expected inflation part in the world's largest economy in the SMP 500 a solid 2% on the back of that news. In the tech heavy NASDAQ and we saw even more robust strength there and that market investors have it up about 2 1/2%. Unless chicken on Bank of America, one of the Wall Street heavyweights and see how it is fairing today. When everyone is waiting for, we are seeing some very clear reaction in the equity and bond markets based on this. >> That's right, everybody salivating today because was almost a year since the US CPI did not surprise to the upside about consensus expectation. So, the market got really used to these volatile days leading up to US CPI where consensus would expect something and CPI would come in higher. This time around, economists were expecting about 8.7% for US CPI year-over-year and at July it came in at 8 1/2% so little lower, but still very high number but of course CPI expecting 6.1 and came in at 5.9. So, I think this is definitely helpful for sentiment, but I don't think the inflation story is raising the white flag just yet. >> The devil is always in the details on this, so stick to that number. You talked about the core there, so will take to bring inflation down in a way that would make the Fed happy in the next few months. And we had a 0% month over month. There are some sticky elements in a core number though? >> Absolutely I think the stickiest thing we have to watch is shelter prices. Kimberly but on a month-to-month basis and is that a 6% month over month and it came thin at .5, but the trend is very clear in shelter prices. That is one that drives a large part of the CPI basket and also very linked to the cycle, as wages are going up, we know this happening in shelter prices go up to. That part is not over yet and the trend is still there. Shelter prices are about 6% year-over-year in terms of its rate. That is the part where the Fed really has his work cut out. The easy stuff that will start to normalize are things like airfare and used car prices, things that are being really out sized drivers of inflation recently. That is what drove this in CPI. That can continue, but the stickiness is still there in terms of shelter and other core services. >> With that in mind, skip back to the market, not only losing that inequities but it seems that market participants are starting to peel off their pets about a number jumbled hike from the Fed. And this gives them a bit of freedom to say maybe is only 50 next time. Are they reading too much into this one month of numbers with those other considerations? >> One month can never make a trend. For the most part, we know it is good to have her for the rest of 2022. We know the Fed and the Bank of Canada are in one way or another going to get to a 3 1/2% policy by the end of the year. With that is a 75 Basis in September or small as later or 50 Basis Points in September, I think that will move around over the next month or month and 1/2. As it stands right now, 50 basis points right now is more likely than 75. We will wait to see what happens. It will still be another job at Sprint and that is also, the labour market is still so important to watch in terms of what is happening in terms of the tightness of the market, but also the wage growth story. Wage growth is still very high and at the end of the day, that is important indicator for inflation. You know, we will see some volatility, but at the end of the day we note the Fed and the Bank of Canada are going to do toward the end of the year. >> Want to get toward the end of the year, we have betting participants and also get her the end of cycle that is been brutal and swift and quicker than many thought would happen in the depths of the pandemic. . . Within their portfolio? >> Yet Stern called the Fed pivot, recently driving some of that market and a lot of market participants thought that the Fed was starting to sound more and grow story would be more important than the inflation stories and lead to inflation cut starting as early as Q1 or Q2 of next year. I think it is less the pivot and more that the Fed is trying to gain more optimality, more flexibility in how they want to behave because you're such a range of outcomes for both growth and inflation over the next 6 to 12 months. I think that that is where there is some vulnerability in the market were rate cuts are still priced in for next summer and so that would imply that even though inflation is going to be may be 4% next year, the growth control have to deteriorate enough of the Fed will need to cut. So, that is where we have to watch the data and if the economy in the US and Canada is still proving to be fairly resilient, that is the part of the bond of the yield curve that could reprice where instead of cuts we stay close to this restrictive policy level of 3 1/2 to 3.75%. >> Let's talk about the yield curve, because in previous times with inconsolable volatile we will look at things like choose and tense and say the bond market is telling us something. Their tongues we have a rough road ahead and eat a recession. And everyone is watching the immersion pretty carefully right now. Is it still that same measure or things become so volatile coming of the pandemics that we can't say things equal this or this? >> Yes, historically it has proceeded recessions, but the time between an inversion and you actually get a recession can really vary quite a lot. It can be less than a year or up to three years. This just different every cycle and I think we need to do is take a step back and say, yes, the bond market is saying [...] two-year rates have to stay high. Whether growth can stay resilient really will define whether the tenure rate gets meaningful lower from the tier rate where it is now and serves to indicate that a recession is coming. I think it will really be data dependent. Looking globally, the UK for instance, we are seeing more projections for recessions in some other developed economies, so you need to watch that. >> And of course wages can be sticky once you set the rate you were talking about shelter costs as well. Are there any wildcards? You get one print and it is softer than expected and vaguely reached peak inflation and what wildcards can trip us up? >> I think energy costs or when it will always be volatile. Look at core inflation because it excludes food and energy, but the reality is food and energy prices have mattered a lot for consumers not in terms of hitting the waltz now but also in terms of building inflation expectations. If you're seeing higher prices at the pump or at the grocery store, that will influence your psyche around what tents expect in terms of prices going forward. Right now, we are seeing relief at the pump. Food prices are still going higher, but those are the part of the equation that I would worry about because they could really revert back the other way depending on what happens in terms of the Russia and Ukraine situation, how sanctions will evolve, and so I think that is the part that is more of a wildcard. The flipside of that is that shelter prices, I would call a wildcard, but unknown stickiness and we just have to keep monitoring that as well. We are seeing reduction in inflation expectations right now and we still have to keep in mind that shelter really drives everything. >> Great insights and a great start to the show! We want to get your questions about fixed income for him in just a few moments time and of course can get in touch with us at any time if you email MoneyTalk live@td.com or fill out the response box under the video here on WebBroker. And right now want to get you updated on the top stories in the business world and tell you how the markets are trading. >> Elon Musk has sold more Tesla shares and it appears that Musk is building a cash cushion if he loses his legal battle with Twitter. In a tweet, the Tesla CEO said it is important to avoid an emergency sale of Tesla stock if he is forced to close the twitter deal is equity partners quoted do not come through. Last month, he backed out of his 44th billion-dollar bid to get the platform and the matters now before the courts. Pharmacy sales helped Metro grade the bottom line in this most recent quarter and the grocery store operators is that it expects food sales to grow to a higher rate in the coming quarters. If the grocery industry moves down some tough comparisons when food sales soared during the pandemic. All that said, Metro is warning investors at a conducive base higher than normal inflation pressures and labour shortages and while the grocer said it is difficult to say how long this pressures will persist, could put some pressure on profit margins. West Fraser Timber says that it is firmly cutting back on production of three of its facilities and that is transportation constraints continue to pressure the business and access to markets. The company says it is moves will result in one shift being eliminated on each of the three plants affecting 84,000 workers and expects to lessen the impact on those workers by offering them jobs and other operations. List Québec and on the main industries and will start here at home on Bay Street pretty comfortable 289 points at this hour at 1 1/2% and south of the border, even a little firmer to the upside, he of the S&P 500 at 4202 of a pretty solid 80 points, a little short of 2%. And we're back now with Hafiz Noordin, the profile manager at TD asset management and we are taking your questions about fixed income associate right into them. The first one in: is it time to buy long bonds? >> The case for long bonds has been more compelling as opposed to say a year ago. The level of income you're getting in the US or Canadian 30 year bond is in around 3%. And so, I think we've obviously seen a lot of volatility and is been concerned about when it's right time to get into the long bond and the reality is that predicting what is going to happen with inflation or the growth outcome globally is very difficult. Timing will also be tough. If you're an investor who is thinking through the cycle and thinking long term, the long bond and fixed income in general I would say can really play a role in a portfolio because not only are you getting the income right now, but it really will play a role when you get to recessionary environment or time when equities are really dropping because of the deteriorating growth picture. And that is the time when long bonds can help to buffer your portfolio of returns. So yes, I think it is worth taking a look at and in terms of broad portfolio construction. It really just depends on time but make sure not trying to play that game of timing, it sometimes makes sense just to deploy gradually into a strategy based on what your objectives are. >> You talk about portfolio strategy and some of the questions there. And some of the questions of how the show since we watch this year, some people lost faith in the idea of the 6040 or whatever your composition between equities and bonds are going to be in because when equities were plunging, their bond proposal plunging as well and they thought things are broken. And obviously the situation is different now. The seem to shape the confidence of investors this year. >> It did in inflation it was really through that picture. And more importantly, correlations changed where when equities were going down, bonds were going down as well. I think that really has shifted that confidence in that type of asset allocation. I think at the end of the day, there are always new ways to evolve the 6040 conventional portfolio, but for the most part, if we look again longer term and if we expect in inflation will eventually come down, there is still that positive or rather that correlation where bonds can provide a more shock absorption compared to equity. Those times are still ahead, but we need to wait for inflation to truly subside. >> Another question coming in on the platform, what you see coming in, what you see happening to corporate debt over the years? >> It's become more attractive over the year, the average spread for an investment corporate bond was around 90 basis points at the beginning of the year and about 140 basis points. Some decent widening or cheapening of corporate bonds relative to treasury bonds. I think the two forces really pulling corporate bond valuations right now is on one hand, earnings are still really good. Growth as it stands right now the global economy is very good and therefore earnings growth is very good as well. The forward-looking view as well we know that central banks are tightening and one of the growth expectations are coming down. It does still mean that there is likely some pain ahead for corporate bonds we know that central banks have to tighten so much and we know there's volatility in earnings as well. I would say my view on that is that corporate bonds are strong balance sheets can weather a recession and there bonds are cheaper now I think it makes sense to be allocating to some of those. But on the flipside avoiding the triple seas of the world where there is higher default risk and more of a chance that during a recession and may not be able to survive. You have to avoid some of those at the lower end of the credit spectrum. >> As he said, give a longer term investing horizon you can start to get through some of the noise of it all. >> Absolutely. So when these octaves come up in the late cycle or recession environment, you have that liquidity deployed in getting out a better valuation than you could have a year ago. It is really just about staying patient, staying prudent in identifying those opportunities, but not necessarily rushing in and deploying gradually into those opportunities as the cycle develops. >> Are you looking around the globe right now? >> For sure, and Canada 3% of the global economy so why not limit ourselves to the opportunities that are here. There are some very strong companies in Canada that are worth investing in. But the US is frankly the deepest bond market in the world and you get a lot of US corporate's as well as global corporate's coming to the US to issue there. It is very important to open that up as part of the opportunity set. Not only because of geography, but also in terms of sectors. You can diversify in terms of different sectors that are not well represented in Canada. Similar to what one might think of in the equity world as well. Looking at the US market and also in euro as well opens up a lot of good opportunities. >> Fascinating stuff and will get back to your questions about fixed income for Hafiz, but first our educational segment. We are discussing the fixed income space on the show today and are quite a few elements to understand when it comes to bonds. WebBroker has tools that will help you. And joining us now to help you through them is Harin Amin, great to do with us as always! What kind of data can look for the platforms with the succession on bonds? >> Great to be your great thank you for having me again! We are getting interest in viewership about bonds. And to paint a bit of the picture, the bond market is by far the largest securities market in the world just everybody understands and provides investors with virtually limitless investment options. It was once viewed as a way of earning interest while preserving capital, but bonds evolved into $100 trillion global marketplace that can offer many potential benefits to your portfolios. And including attractive returns now as well. Before we tackle just exactly those data points on bonds, want to provide a bit of a primer as to exactly what a bond is for some of our viewers. Essentially, a bond is a loan that the bond purchaser or bondholder makes to the bond issuer. In this case, bond issuers tend to be governments, provincial bodies, municipalities and also corporations and the reason they're issuing these bonds is to fund projects and initiatives. For example, if an investor purchases a corporate bond, there essentially lending money to that corporation. Just like alone, the bond purchaser will be paid interest or collect interest and also will have their principal repaid at a stated time in the future which is known as maturity. We are going to take a step into WebBroker over here and we're going to show you how to actually find some of these data elements on bonds. Click on a research tab here and under our investments category, we can go to fixed income. This is where we are going to find our bond data. I'm going to just pick corporate bonds to give us an example. I'll pick the 5 to 10 year range and will see a list that pops up over here. Most of these were going to be seeing our Canadian bonds. Just to dive into it, we're going to click on the CI financial Corp. is an example and this is some of the data that will be available to an investor to see when they bring this up. A couple of things you want to highlight first on this is the coupon and it's really tells investor, at the time this is issued what was it investing in, call this the coupon. Generally bonds are priced at a value of $1000 and sometimes are presented as a smaller amount of $100. Essentially, this means at the time of issuance this would have amounted to getting three dollars and 90. 4 cents of interest annually based on a par value there. The other thing you can also see is the maturity date, how long this font is, one will come to maturity. And when the principles meant to be paid to the bond owner and in this case it is September 27 of 2027. Apart from that, well so the payment frequency which I will highlight over here which tells the bond purchaser that they're going to be paying interest semiannually no get two instalments of interest throughout the year that is being paid and it will show them when that next coupon or payment interstate is coming up there. The other thing of interest and note is that we know that bonds can be purchased in the secondary market and the value is reflected based on the yield that they have and perhaps even the credit rating. We can see that bonds have a par value which means at the time of issuance to be valued at $100 for example. And if the bond is trading low that hundred dollar mark, that is known as a discount. We can see in this case, the ask price, we are to buy the bond in the secondary market today is that 9669.8 cents which would tells of this is trading at a discount. Based on this price we purchased, we can actually calculate what our yield is going to be based on the current asking price. So anyone purchasing this bonds today would in fact amount to a yield of 4.63% at this current price. And the other thing of importance is the credit ratings. You can see this one is rated as a triple B. Usually bonds are rated to determine their credit worthiness that they have. There are two main rating agencies we have across Canada and the US. In Canada we as dominion bond rating services in the US they have standard employers. In the rating start from a letter clinic system from AAA all the way down to the D which stands for default. Anything from AAA up to triple B is considered to be investment-grade and anything double B or lower is considered to be high yield or would, called junk bonds. If you go to that speculative nature of those junk bonds, they tend to offer high yields that is due to the fact of the higher pursuit market risk that they have over there. So these are just some details that anyone is interested in bonds will be able or would want to be keen on knowing. >> That's a great breakdown of those key elements to never understand them, how can you make a purchase on WebBroker? >> Of course, if you go on this page that we are running on, it will go to CI financial and you notice there is a buy and sell function there. We are going to click on the buying function and you will take you to this page what will you will inputs the quantity or the amount you want to purchase. There are two fields to see and it is a quantity field or investment amount. We talk about quantity, this is sent to the face value, at maturity how much you want to get. Lesson we want to have 10,000, that means I maturity want to get 10,000 routine to us or repay to us. And we would do is go down here and hit recalculate and from here will tell you is based on the current ask price on the spot and how much will cost us. Even my mood by a bond on the secular market we give to pay accrued interest in this invasive interest until the next payment and we owe to whoever is selling it and this would be the cost for us to purchase the bond at this time and then you follow the prompts to go ahead and complete that purchase for you. >> Great stats and thank you for joining us today! >> My pleasure, thanks for having me Greg! >> Of course, see you next time. And to go to the webinars for master classes. . . Including how managing my profile during high inflation. Before we go back to questions on fixed income for Hafiz Noordin hearsay can get in touch with us. You question what is driving the markets? Our guests are eager to hear what's on your mind. There are two ways you can get in touch with us, you can send us an email anytime and MoneyTalk live@td.com. Or you can use a question box at any time on the screen on WebBroker and just type in your question and hit send! We'll see if one of your guests can give us the answer to your question right here on MoneyTalk live! We are back now with Hafiz Noordin from TD asset management and were taking questions about fixed income and this one just coming and we are having our discussion about if interest rates rise, will GICs also rise? A lot of questions on GICs in this last show. >> Absolutely, similar to bonds, there are many types of GICs that you can get and so for a very short term GIC, three months or so, the rate would increase once the Bank of Canada raises its interest rates. If you're already locked into it it won't change at that point. The other thing to consider is say, for a one euro to your GIC it does depend on the rate right now the rates that are expected going forward. We had this discussion about how we know it's going to happen for this year, but it is next your word is more debatable and if this rate cut expectations do persist into next year and into 2024, that will impact GIC rates over that whole term. You have to keep in mind that it is not the current rate, but what is expected going forward will influence a GIC rate and once you do deployer capital into that, you are locked in for that. >> The current one piercing are pretty forward looking in sourcing where the market is may be headed. We have a related question which is basically: Will GIC rates go up? I know we don't have a crystal ball, but if it is a forward-looking instrument, perhaps some of those rate hikes we are still anticipating her within GIC rates? >> Absolutely and it follows what is happening within the bond market in terms of expectations for next year. The main catalyst for any type of cash product GIC or others that are linked to rate expectations for the next year, the only way that can really go up is if we do see a higher terminal rate that is priced in for the Bank of Canada or for the Fed. Right now, that terminal rate is 3 1/2% and rate cuts are priced in afterwards. So, let's say that the inflation picture gets much more persistent and less say that growth is actually deteriorating as much as the market expects right now, arguably, central banks might feel that it is necessary to take their policy rate higher than 3 1/2 or may be close to four or even higher. And that would be the environment in which you would see cash and GIC rates follow to a higher rate than what is priced in right now. >> Fascinating as you pointed out, when you are locked into GIC you are locked in. Listen to another question on the platform. Are you seeing any opportunity in the emerging markets right now? >> It is still difficult environment for emerging markets from an economic outcome perspective. In that, we do have high inflation, growth expectations coming down and especially have the Fed hiking rates, that is a bad combination for emerging markets historically. It is been like that for some time we're announcing is that similar to what we talked about for corporate bonds, there are opportunities coming up in some countries. But it is very case-by-case. It is not the all emerging markets are starting to look attractive at once. One country that is standing out right now is Brazil which just recently had their long-term policy and hiked rates to 13.75%. And so, that follows a campaign so to speak over the last 12 to 18 months of raising rates in anticipation of inflation and as it did realize what is happening now is that inflation is starting to look like it might be peeking a little bit in Brazil at about 10%. As an investor, when you look at a bond earnings sit 13 or 14% on a normal basis and if inflation is 10%, your real yield which is the difference between the two is about 3 to 4% in Brazil. That is very unique in Brazil, that positive real yield and you have to hold the currency exposure to realize that yield. You have to do the work to be comfortable holding that have the ability to hedge that currency exposure at times if you feel that is necessary. The only the risk that I would highlight for Brazil is that they do have an election coming up. other opportunities in Eastern Europe, which we know is in a difficult environment this year with the Russia and Ukraine wore, but if you look at countries like Poland or Czech Republic or Hungary which are investment-grade rated sovereigns, they've been really proactive and really aggressive in raising rates. It went from essentially zero rates out last year now at 7% in some countries, 10% in Hungary. Again, the yield opportunity is quite high. So, I think that is where again we are seeing some potential opportunities that inflation is maybe starting to not subside totally, but at least starting to stabilize. That is when it helps to get to some of these emerging markets when they've already raised rates a lot and you start to realize some of those high yields. >> Interesting stuff, and do your research before you make investments. We will get back to your questions in just a moment's time. In her mind of course you can always get in touch with us. You have a question about investing what is driving the markets? Our guests are eager to hear what is on your mind and so send us your questions! There are two ways you can get in touch with us. You can send us an email anytime at MoneyTalk live@td.com or you can use a question box right below this screen here on WebBroker. This writing your question and hit send. We'll see if one of our guests can get you the answer right here at MoneyTalk live. Markets are on the rise today after that cooler than expected US inflation print. Anthony O'Connor joins us today. >> It was. . . Over June and 8% in July, as both gasoline and energy services were lower on the month and just to give that some context, the June CPI rating was +9% year over year, the highest in four decades and TD economics is at the core inflation which excludes the volatile food and energy sectors was a pleasant surprise. The Vermont, core inflation was 4/10 lower versus June. All of this of course leads into the bigger question of whether or not the US is headed into a recession. Here's what Brian Clancy that the CBC had to say on the topic, specifically when looking at the jobs data, have a listen! >> Layoffs and separation which is what is called is still a record low. It is not apparent that when you have some high profile companies that are adjusting what they are doing based on past patterns and their forecast going forward, it is not pervasive. Over 90% of industries are still in hiring mode. When you head toward a recession, that has to get below 60% is a leading indicator for several months out and so are nowhere near that mark. This is the debate happening in the markets between the negative media headlines versus the reality of the data. >> Revisit points TD economics is that wage expectations, north of 5% on an annual basis and that is again well above the feds 2% inflation objective. TD economics is that going forward will see inflation moving meaningfully lower until you see wage growth decelerating. Greg? >> The big question here that markets grapple with on a daily basis, given the softer print, is this enough to convince the Fed that maybe they don't have to hammer us so hard heading into the fall when it comes to those jumbles size radars have been delivering? >> Yes, this may make the Fed back there policy, however TD economics is looking for a 15% rate hike in September and not her ruling out 15 business hikes particular to get another surprise on inflation and jobs data in August. >> We solve a few more points to come. Thanks Anthony! And will get you up on the economics right now, trading on based on Wall Street and here at home, the TSX index, a little bit more than 300 points and a pretty solid one and 1/2% gain on the day. And less check-in on CAE, the flight similar company revising its annual growth downward and that is hitting the shares. Not all of the parts of the market are rising today. At 20 bucks and $0.33 a share, Mussina down to the tune of almost 15%. In South of the border, struck at the rally on Wall Street on the back of that, softer than expression inflation print any of the S&P 500 and at the top of the show were at a solid 2% solid at 1.8% and at 4200. And at NASDAQ the tech heavy industry seems to be fearing a bit better, up just a little more than 2 1/4%. In Norwegian Cruise lines we told you about yesterday in the name of some concerns with the strength of the business, but today seems to be a solid snap back in the shares. 13 bucks and $0.79 and up 14% spirit and we are back now with Hafiz Noordin taking your questions on fixed income. This get to this one right now: what is your outlook for risk assets after the recent strong US data that we have seen? Apart from the softening expected inflation for today we are seeing solid labour markets are from the US. >> That's right and we did two. During the summer thought of risk assets and corporate bonds got to levels that start to get very cheap what happened in the market is that it got very light on corporate bonds. And so we see a rally over the past month or so that is largely been driven by things overshooting a little bit in terms of pricing equity is lower. I think that moving ahead, the outlook for risk assets really does depend on the inflation picture. It is not raising a white flag twice yet! Maybe one day celebration, moving ahead of that, the risk assets are dependent on releasing the stickiness and inflation start to stabilize at least and then hopefully start to come down. That is the bigger picture for risk assets. And also, can we get to this soft landing or not? And can corporate's really incorporate these bonds and it is going to be data dependent. It is still such a wide range of outcomes and so it is hard to call exactly what will happen. But that is important to being nimble in a portfolio and ensuring that you have a balanced portfolio. >> In here with a question on the currency space. You see the US dollar strength continuing? >> Is deftly been a safe haven in the year when there's been a lot of volatility and a lot of reasons for fear. One driver of that has definitely been the US raising rates quicker and starting earlier than say the euro and Japan. The appreciation of the US dollars been primarily versus those currencies, 15% higher against the yen. And moving ahead, a lot will still depend on that. The trajectory of rates and hikes in the euro and Japan. When it comes to Japan, I don't see them raising at a time soon, they seem to be patient. But the euro has continued their hiking cycle. And so it depends on how the two central banks will behave. Outside of that, the US dollar has been a safe haven for even the Russia and Ukraine situation. So how that evolves will be important in terms of providing that quality to the US and that historically has been away for the US dollar to play a role in portfolio is that kind of insurance against negative outcomes. >> I haven't seen any headlines along this, but I soon the past, when someone wants to take a run of this idea of the US dollar being a safe haven going forward. That it will get knocked off the picture by someone else. In times of trouble, seems to revert back to that US dollar. Do they have any competition in this space? >> The moment, not really. The three main safe haven currencies have been the US dollar, the Japanese yen and the Swiss franc. Right now, with the Bank of Japan not really following the rest of the world in terms of rate hikes, that is really because this big depreciation in the yen. Having said that, moving forward, the key term is always not just focusing on what is happened but moving ahead, arguably, there is a case to be made that the US dollar, that we're getting to that sort of peak rate in terms of the policy rate and once that happens, is a really much use left to say whether other safe haven currencies like the yen or the Swiss franc could play a role? I think it is always an active management strategy when it comes to currency. The factors driving currency are always changing and so it is important to see how that evolves. For now, I'd say that for now the US dollar can still play that role. >> With time for one more question. And squishing in trouble throughout the show, it almost functions as a final thought. Do you think the central banks will continue to hike into the fall it in through the winter? >> Yes. They have two and inflation in the states is still 1. 5% and here in Canada, that is the job of central banks. It is a funny story for the US where. . . But at the end of the day inflation is driving most pain right now and that has to be their main job. There really has to be the expectation that central banks are going to take rates to restrict their territory and possibly keep it at a restrictive level longer than what the market is priced in. That is vulnerability in the market right now, that there may be some complacency around those expectations. >> Great to have you here and thank you for this chat and look forward to the next one! Hafiz Noordin TD asset management on fixed income. And on this Friday will be talking to Julian will be our guests and take your questions on semiconductors and should be an interesting one! And get your head start on getting questions into us if you email MoneyTalk live@td.com. Thanks for joining us and see you next time! [music]
