Monday morning briefing: Steepening yield curve means steepening profits for banks

February 22, 2021

The first Bitcoin exchange traded fund (“ETF”) in North America, Purpose Bitcoin ETF, was launched last week. The ETF invests directly into Bitcoin and is available in Canadian, non-hedged units and U.S. dollar units. Needless to say, interest was extremely high, with US$145 million in shares of the ETF being exchanged in the first day.

Bitcoin has soared higher in 2021, largely in response to wider adoption, particularly among institutional investors. This will be a closely watched ETF, and it appears more offerings will be making their way to market in the near future. The U.S. Securities and Exchange Commission is likely monitoring this launch and considering its own approval of a Bitcoin ETF in the U.S.

Economic/industry news

Canada’s inflation rate rises to 1.0% in January: Canadian inflation ticks up but price pressures remain subdued

Retail sales in Canada decline by 3.4% in December: Retail sales fell 3.4% in December, marking biggest decline since April

U.S. retail sales post strong growth in January: Retail sales burst higher in January as consumers use stimulus checks to spend heavily

Fed minutes show the U.S. economy still requires easy monetary policy: Federal Reserve meeting minutes show support for ultra-low interest rates

Fund managers are bullish on the economic recovery: Bears are in hibernation in February: BofA survey

Reasons for hope

Another vaccine cleared for emergency use: AstraZeneca COVID vaccine cleared for emergency use by WHO

Canadian provinces to expand vaccination programs as more doses arrive: Provinces to boost vaccination efforts as Pfizer deliveries set to ramp up

In-person conferences in 2021 dependent on vaccine distribution: In-person conferences are coming back. Are advisors ready?

Adapting your business

Helping employees who may be struggling through pandemic fatigue: As pandemic fatigue sets in at work, employers try to help

Planning for any type of possible disruption is one of the keys to a company’s resiliency: The key to organizational resilience is planning ahead: Here’s why some organizations fared better than others during the pandemic

Maintain strong financial habits after the pandemic: 6 ways your clients can emerge better from the pandemic

Understanding how to communicate with ultra-high-net-worth families: How to market real estate investments to wealthy families

Chart of the week: Steepening yield curve means steepening profits for banks

The benchmark 10-year U.S. Treasury bond yield continued to advance last week, and climbed above 1.3% for the first time since February 2020. The gain was the result of rising inflation expectations, and could put pressure on equity prices.

But not all equities will be negatively impacted. The climbing yield at the longer end of the curve, combined with low short-term interest rates, is causing a steepening of the yield curve and has benefited the performance of banks. In response, bank stocks on the S&P 500 Index have climbed more than 17% thus far in February.
Used with permission of Bloomberg Finance L.P.

News and notes (U.S.)

Hedge funds post positive performance in January: Hedge funds up 0.98 per cent in January, says Backstop BarclayHedge

Interest in ESG-related SPACs: Institutional demand buoys socially conscious SPACs

Will the carried-interest tax break come to an end?: Democrats target private equity, hedge fund tax break in bill

Goldman Sachs launches robo-advisor: Goldman unleashes digital investment platform for the masses

Many Americans were struggling even before the pandemic: Households were financially fragile before the pandemic: report

News and notes (Canada)

Further fiscal stimulus needs to be targeted: Further fiscal stimulus should target productivity, C.D. Howe says

Another Bitcoin ETF coming to market: Evolve set to launch its Bitcoin ETF

52% of Canadians won’t make an RRSP contribution this year: Half of Canadians skipping RRSP contributions in 2021: survey

Ontario to increase the small estate limit: Ontario raises small estate limit to $150,000

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