Daily Commentary

MarketMinder’s View: “The US money-market industry now holds a record $8.29 trillion — almost twice the size of Japan’s economy — after inflows topped $1 trillion last year, according to Crane Data LLC, which tracks the industry. The strategy’s popularity has been accompanied by a Wall Street catchphrase, ‘T-bill and chill,’ which has come to signify investors’ preference for the short-term Treasuries these funds often hold.” To the extent that statement actually reflects investors stockpiling cash, which the first roughly two-thirds of this piece suggests is the case, it could be a sign of people making a vast mistake. Money-market fund rates may be higher than in the 2010s, but that doesn’t make the return good. For one, inflation is currently running at 3.8% based on the US CPI—and has annualized 4.5% in the past five years. Is that exaggerated by 2022? Yes. Likely to repeat? No. But it does highlight how inflation erodes money market returns and often leaves you with little to nothing. The notion that stocks are too high and assured to see poor returns ahead is a forecast, one that is tremendously uncertain and amounts to market timing based on past movement and widely known perceptions about the environment today. But the last third of this piece raises another point: Is the money market boom really a market call? People often see these data and presume it is cash parked on the sidelines, but many times it isn’t that at all and amounts to corporations and individuals holding increased cash for reasons tied to expenses (or inflation, as the figures are nominal). This is why those long expecting this “wall of cash” to boost stocks have been disappointed.

MarketMinder’s View: Can you combine two misperceived takes to reach a sensible conclusion? That is the question we pondered after perusing this coverage of Canada’s May jobs report, which showed employment boomed higher, offsetting almost all the jobs shed earlier this year, with gains broad-based and focused on full-time workers. The article casts this good news as a signal that Canada’s economy isn’t as weak as two straight quarterly headline GDP contractions—which some dub a “technical recession”—suggest. We agree with that take on Canada’s economy. Claiming it is in a recession overlooks the fact that the Q1 2026 decline was chiefly centered in government spending and tied to rising imports, which the math of GDP treats as a negative to offset consumption. But labor market data are late-lagging, with major shifts coming long after growth trends change. So while we think that handwringing over prior declines in employment and GDP is overdone, we wouldn’t hang our hat on one jobs report to show why. Furthermore, the S&P TSX is up 10.6% year to date (in USD), edging past the world’s 10.5%—and that follows its huge 38.2% last year, which vastly outperformed the world (source: FactSet). Stocks are leading economic indicators. If Canada’s economy were truly in or about to enter a recession—or were in one before—you would ordinarily see markets pre-price that by falling for a prolonged period. That is absent.

MarketMinder’s View: There is a lot of bloviating in this piece about what policymakers may or may not do with the US fed-funds target rate, which you can tune out: No one actually knows, as Fed policy is set by a cabal of people whose actions aren’t consistent or forecastable. Instead, zoom in on the titular index, which is the New York Fed’s Global Supply Chain Pressure Index. This gauges the degree of stress in global supply chains using a measure of standard deviations (degree of variance) from the historical average. May’s reading was 1.77, down from 1.82 in April. This article couches that as, “The index remains in the vicinity of readings seen in the latter part of 2022,” a time of hot inflation. It may have you fearing a redux. But some perspective is lacking here. The same gauge peaked at 4.49 in November 2021, a disruption that, combined with huge money supply growth (US M4 peaked at 30% y/y, per Center for Financial Stability data), drove the hot inflation we saw in 2022 and 2023. That is vastly different from today, considering each standard deviation is a huge step from the average. We are at a fraction of the supply chain pressure from then. Moreover, M4 grew 5.9% y/y in April, in line with low-inflation, prepandemic trends and also a fraction of 2020 – 2022 rates. This isn’t the huge inflation warning signal this article casts it as.