Mar.19, 2021

INTEREST RATES – A LOOK AT HOW RATES IMPACT BOND PRICES

  • When interest rates rise, bond prices fall. As shown below, if an investor purchased 10 Year US Treasury bonds in April 2020 and sold them in March 2021, they would have lost $14.06 for every $100 of investment.
    • January 2020:   Yield: 877%   Price: $99.19
    • April 2020:   Yield: 646%   Price: $108.29
    • August 2020:   Yield: 706%   Price: $99.07
    • December 2020:   Yield: 918%   Price: $99.19
    • March 2021:   Yield: 717%   Price: $94.23
  • Bonds with a short term to maturity have less price volatility than those with a long term to maturity.

ENERGY AND ENVIRONMENT

  • Canadian Federal Government and Province of Quebec announced a joint $100 million investment in electric vehicle manufacturing by loaning funds to Lion Electric of Saint-Jérôme Quebec.
  • International Renewable Energy Agency says planned investment in clean energy must increase by 30% to $121 billion by 2050 to avert catastrophic climate change.
    • Massive scale up in hydrogen production is particularly acute
    • Expects use of natural gas to peak in 2025 but still be the dominant fossil fuel by 2050
  • Refiners in India are buying less oil from the Middle East in the coming months and are buying more from the US.
    • In 2020, approximately 86% of Indian oil imports were from OPEC
  • International Energy Agency (IEA) does not expect global oil demand to return to pre-pandemic levels until 2023 with growth subdued thereafter. They are forecasting demand of 101 million bbl/d in 2023.
  • University of Cambridge says that 63 countries will likely see downgrades to their sovereign credit ratings if they do not reduce emissions. US could drop 2 notches and Germany, India, Netherlands as much as 3 notches…this will increase the cost of borrowing for these countries.
  • According to GasBuddy, US gasoline demand last week was just 0.98% below pre-pandemic levels.

TIDBITS

  • Our CEO Louis Vachon C.M. encourages a flexible mindset to respond to the needs of his employees and the global forces shaping the world in 2021. Check out his advice to future-proof your business here.
  • Walmart is closing 6 stores in Canada and investing $500 million to upgrade more than half of the remaining locations with a focus on improving their online business.
  • Deb Haaland was confirmed as the US Interior Secretary making history as the first Native American to serve in any president’s cabinet.
  • Iceland has opened their boarders to visitors who have been vaccinated against COVID-19 without mandatory testing or quarantines.
  • Britain is expanding their nuclear warhead stockpile by over 40% to ensure security in an increasingly risky global environment.
  • Apple has agreed to let Russians pre-install local apps on new iphones.
  • IRS has delayed the US tax filing deadline to May 15, 2021 from April 15th because of the ‘chaotic’ year.