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BOC Decision Day | Global Bond Market Flashes Warning Signs

Published May 29, 2019
  • This morning, the Bank of Canada is widely expected to leave interest rates unchanged; markets expect the central bank is in no hurry to move the rate any time soon. The policy announcement will come at a time when the economy is starting to show signs of picking up after major deceleration towards the end of last year, largely caused by a drop in domestic oil prices.
  • Global government bond yields are plummeting again, with the US 10-year trading at 2.23% this morning amid increasing global trade tensions. The spread between 3-month and 10-year American treasury yields has narrowed the most since 2007.
  • There are growing concerns over China using its monopoly in the global supply of rare-earth elements as a means of countering US trade measures. The main outlets for the Chinese Central Party have recently published reports highlighting this possibility as the country controls 80% of global supplies.
  • This morning reignited investor apprehensions over the health of the global economy. That trade outlook is hammering back at oil again, as a barrel of West Texas Intermediate dropped more than 2.5% this morning to trade at $57.80.

To the Clients of EncoreFX:

 

It is with much regret that we inform you that EncoreFX’s (the “Company”) offices are suspending trading effective immediately.

This suspension will give the Company time to consider its restructuring alternatives. The restructuring has become necessary as a number of customers to whom the Company granted credit have defaulted on their obligations to the Company due mainly, we believe, to the rapid changes in the FX market caused by the coronavirus pandemic.

 

In order to provide stakeholders with transparency, the Company has filed an assignment in bankruptcy pursuant to Section 49(1) of the Bankruptcy and Insolvency Act (Canada) (the “BIA”) with respect to its Canadian operations and has assigned its Australian and New Zealand subsidiaries in Voluntary Administration in Australia and New Zealand. 

 

Ernst & Young has been appointed as the licensed insolvency trustee (the “Trustee”) in Canada and as the Administrator in Australia. 

 

Once the Trustee, working with the Company, has determined the best options for the Company and its stakeholders it will share that information with you. Information pertaining to the bankruptcy of EncoreFX will be available, in due course, on the Trustee’s website at: www.ey.com/ca/encorefx.