Market Information Wednesday 22 January 2025

Canadian inflation stayed within the central bank’s target range for a full year, the first instance since 2019, with a year-over-year increase of 1.8% in December. However, the potential for a trade war with the US poses significant economic risks, potentially impacting the Bank of Canada’s approach to interest rate adjustments. Despite controlled inflation, uncertainty over tariffs may lead the central bank to reconsider its monetary policy.

US government bond yields neared their lowest levels of the year as President Donald Trump delayed tariffs, reducing inflation concerns and prompting a relief rally in Treasuries. Despite tariff threats against Mexico and Canada, markets avoided immediate shocks, with the 10-year note yield falling to around 4.57%. Investors now anticipate Treasury yield declines and possible Federal Reserve rate cuts, reassured by the absence of imminent tariffs on China.

Commerzbank AG is considering smaller strategic acquisitions to enhance shareholder value, while avoiding hasty decisions amidst a potential takeover threat from UniCredit SpA. CEO Bettina Orlopp aims to increase profitability and strengthen the bank’s position as a standalone entity, with further strategy details to be shared at an upcoming investor day. Despite UniCredit CEO Andrea Orcel’s increased stake in Commerzbank, the German government opposes a takeover, and Orcel indicated he might abandon the pursuit if it becomes unfavourable.

The 6M Euribor decreased with 2 basis points to 2.62% compared to previous business day. The 10Y Swap decreased with 2 basis points to 2.46% compared to previous business day.
In the attachment, today’s market data on money and capital market rates as well as other rates are presented.