From the Desk

The new Chair of the U.S. Federal Reserve, Kevin Warsh, faced his inaugural test this week as he led his first Fed meeting. He joins a Federal Open Market Committee that is turning more hawkish in line with the data while establishing his own policy approach. Meanwhile, fiscal and political considerations remain part of the broader policy backdrop. In the throes of high inflation, the committee left rates unchanged. That was expected. However, the surprise was Warsh’s hawkish tone as he caught up with the press. This drove the market to up its forecast to two rate hikes this year.

Warsh has indicated he wants fewer public statements and wants his colleagues to do the same. He is not a fan of forward guidance, the process whereby central bankers lay out a road map and update it every chance they get. He prefers the Fed to listen more and remain nimble. He emphasized he wants the market to price what it sees and be less concerned with what the Fed might do. He also deferred some of the tougher questions. Warsh has set up five task forces to rethink communication, the balance sheet, data sources, productivity/jobs/AI matters and inflation number-crunching. He promised an update by the end of the year.

Maybe the best way to understand Warsh is to understand his mentor, former Fed Chair Alan Greenspan. Greenspan was known for a deliberately measured and sometimes ambiguous communication style. While facing a Senate committee he once quipped, “If I seem unduly clear to you, you must have misunderstood what I said.” He felt this allowed flexibility and Warsh favors the same.

Greenspan was also attentive to markets. Markets even popularized the moniker “The Greenspan Put” to describe the Fed’s tendency to react to market downturns with rate cuts. Warsh has also indicated he values the market’s input without it second guessing the Fed’s reaction too much.

Sources: Bloomberg, The Financial Times, 2026.

Canadian corporate bonds have dominated the country’s business headlines this year and are on track to top 2025’s record new issuance volumes. Canadian-dollar (CAD) corporate new issuance volumes on a year-to-date basis are running over 50% above 2025’s year-to-date comparable levels, including recent inaugural multi-tranche Canadian dollar issuances from two global hyperscalers. This has been helped along by a revision in FTSE Canada’s rules, allowing foreign-based CAD issuers to be included in Canadian domestic indices.

What has gone quietly unnoticed is that the corporate weight as a proportion of the FTSE Canada Universe has been falling since late 2018. Federal government debt issuance has actually been the fastest growing segment of the index. While federals were about 1/3 of the index in mid-2020, they have now climbed to 43%. Net issuance of Canada bonds has continued to rise and is now almost double 2019/20 net issuance, while Canada Housing Trust (also in the federal index) is also likely to see a historically strong year for issuance.

Domestic provincial issuance has failed to keep pace with either federal or corporate issuance and consequently has been falling as a proportion of the FTSE index. However, this masks a massive change in the provinces’ use of international funding sources. As recently as 2022/23, provincial governments used foreign currency bond issuance for less than 15% of their funding needs. This year, that proportion will likely easily exceed 40%. The increasing dependence of both levels of government upon the bond markets for financing has been part of a broader global surge in government debt issuance. 

Source: Bloomberg, 2026.