Daily Commentary

MarketMinder’s View: Watch what people do, not what they say. It has been cool lately to claim the rise in UK long-term bond yields—part of a fully global trend—proves markets are growing edgy about UK debt’s sustainability, given uncertainty over Chancellor of the Exchequer Rachel Reeves’s Budget, which has little wiggle room for higher-than-forecast interest payments. But just days after a weak auction fed this narrative, “The £8.5 billion ($10.4 billion) offering of debt due in 2040 drew excess of £119 billion of demand on Tuesday, beating the previous record for the securities originally sold in September. The pricing on the sale was tightened to four basis points over comparable bonds, according to people familiar with the matter who asked not to be identified. Such debt syndications are typically more expensive than auctions, but they allow governments to raise large sums quickly while diversifying their investor base.” This comes after 10-year yields have dropped by nearly -30 basis points in the last couple weeks, yet we see relatively few headlines spiking the football over fiscal success. Record demand at lower rates? Doesn’t seem like a crisis to us and really highlights that the recent moves are likely much more about sentiment tied to politics than a fundamental shift. For more, see our 1/13/2025 commentary, “Putting British Bonds’ Alleged Budget Blues in Context.”

MarketMinder’s View: If you are a frequent seller of goods or services via online marketplaces like Etsy, StubHub or anything of the sort, this article is worth referencing. After dragging its feet for several years, the IRS is set to gradually begin implementing rules requiring such marketplaces to report such sales. It was supposed to do so in 2021 for sales exceeding $600 annually. But there were quite a few complaints about the suddenness and complexity. “Instead, the IRS chose to phase in the change, setting the $5,000 threshold for the 2024 tax year, $2,500 for 2025 and $600 for 2026.” This means you could be seeing 1099-K tax forms later this year if you breached that $5,000 mark. And it means those frequently selling goods and services online should keep good records about cost and profit or loss on the activity. Failing to pay tax on this newly reported income will result in penalties, if applicable. There are exceptions, naturally. “The tax rules for selling personal stuff online are different. If you get a 1099-K for something you sold for less than you originally paid, you wouldn’t owe tax, but you would need to disclose it to the IRS.” But overall, expect more paperwork, more reporting and, potentially, more taxes from this rule’s implementation.

MarketMinder’s View: Prime Minister Justin Trudeau’s decision to enact a national sales tax holiday on select goods including food, clothing and alcohol—a controversial move some cast as popularity-seeking—helped feed slowing in Canada’s headline consumer price index (CPI) to 1.8% y/y in December. This, plus falling gasoline prices, saw CPI actually fall -0.4% m/m in December. That cut extends through January and into mid-February, so there is potentially another reading or two with skew from this one-off. However, while that aspect of the slowing is illusory, it is worth noting that all the measures of core inflation—CPI excluding food and fuel, median CPI and the trimmed mean—were in the low 2%-range. That is within the Bank of Canada’s targeted range, and it all suggests the disinflationary trend of the last year-plus persists, sales tax holiday or no.