Market Leadership

Alternatives to Softening a Recession Beyond Federal Rates Strategy

Jun. 20, 2023 - 1 minute 30 seconds

James Dixon being interviewed on MoneyTalk on June 13, 2023

James Dixon, Director, Family Office Solutions, TD Securities, joins MoneyTalk Live to discuss macro themes. With U$1T in T-Bill issuance to fund the TGA and U$9T of securities maturing by the end of next year,¹ James offers insight on how the Federal Reserve could pivot and begin a bond buying strategy to prop up the economy. James further discusses the potential of a recession given existing monetary policy and the commercial real estate dilemma. James answers viewer questions on these and other topics including the oil and Canadian housing markets.

Key Takeaways

There are differing views of how the FOMC should proceed with rate policy. More significant is James' view of a potential pivot from quantitative tightening to quantitative easing.
A recession could be on the cards for 23Q4 or 24Q1, but rate cuts and quantitative easing could provide a soft landing.
The Bank of Canada rate hikes may have an unintentional negative effect on the housing market by further squeezing supply. Higher financing costs are deterring builders from new housing developments and discouraging retail investors from downsizing/upsizing.
Commercial real estate valuations are in trouble due to hybrid work conditions (i.e., fewer than five days in the office) which are hurting revenues.
The Canadian dollar has remained in the U$1.33 to U$1.37 range for some time. The range could adjust slightly wider to U$1.32 to U$1.37. James argues it is unlikely we see a much broader USD selloff owing to tighter liquidity conditions. This will change when the Feds start buying bonds aggressively.
The war in Ukraine has carried on longer than expected and could serve as a lesson for China's claim over Taiwan.

Source: Bloomberg

This episode was recorded on June 13, 2023.

Watch the full episode featuring James Dixon discussing market trends and outlook on MoneyTalk Live

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James Dixon
Director, Family Office Solutions, TD Securities

Biography

Based in Toronto, James has over 15 years of capital market experience and over 12 years in Foreign Exchange. James started his capital markets career in 2008 and has been with TD Securities since 2016. His responsibilities include providing macro market color, multi-asset hedging advice, asset allocation idea generation, and trade execution services. James has covered the real money, fast money, central banks, and private equity sectors before transitioning to the Family Office space.