Canada’s annual inflation rate rose slightly last month, accelerated largely by higher gas prices, data showed Tuesday.
Statistics Canada reported that the overall inflation rate in the country was 2.9 per cent year-over-year in March, up from 2.8 per cent the previous
Inflation ticked higher in March. Are Bank of Canada rate cuts still in the cards? (msn.com)
Monday April 15
Japan core machine orders
Euro zone industrial production
(8:30 a.m. ET) Canadian manufacturing sales and new orders for February. The Street is projecting month-over-month increases of 0.7 per cent and 1.0 per cent.
(8:30 a.m. ET) Canada’s wholesale trade for February. Estimate is a rise of 0.8 per cent from January.
(8:30 a.m. ET) Canadian new motor vehicle sales for February. Estimate is a year-over-year rise of 20.0 per cent.
(8:30 a.m. ET) U.S. retail sales for March. The Street is projecting a rise of 0.4 per cent from February (or up 0.5 per cent excluding automobiles).
(8:30 a.m. ET) U.S. Empire State Manufacturing Survey for April.
(10 a.m. ET) U.S. NAHB Housing Market Index for April.
(10 a.m. ET) U.S. business inventories for February. Consensus is a month-over-month rise of 0.4 per cent
Earnings include: Charles Schwab Corp.; M&T Bank Corp.
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Tuesday April 16
China GDP, retail sales, industrial production and fixed asset investment
Euro zone trade surplus
(8:15 a.m. ET) Canadian housing starts for March. Estimate is an annualized rate decline of 3.3 per cent.
(8:30 a.m. ET) Canada’s CPI for March. The Street expects an increase of 0.7 per cent from February and up 3.0 per cent year-over-year.
(8:30 a.m. ET) U.S. housing starts for March. Consensus is an annualized rate decline of 2.7 per cent.
(8:30 a.m. ET) U.S. building permits for March. Consensus is a decline of 0.3 per cent on an annualized rate basis.
(9:15 a.m. ET) U.S. industrial production for March. Consensus is a rise of 0.4 per cent from February with capacity utilization gaining 0.2 per cent to 78.5 per cent.
(1:15 p.m. ET) Bank of Canada governor Tiff Macklem and U.S. Fed chair Jerome Powell speak on the economy at the IMF-World Bank Spring meetings.
Also: Canadian federal budget is released.
Earnings include: Bank of America Corp.; Bank of NY Mellon; Goldman Sachs Group Inc.; Morgan Stanley; PNC Financial Services Group Inc.; United Airlines Holdings Inc.; UnitedHealth Group Inc.
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Wednesday April 17
Japan trade balance
Euro zone CPI
(8:30 a.m. ET) Canadian international securities transactions for February.
(2 p.m. ET) U.S. beige book is released.
Also: G20 finance ministers and central bank governors meet in Washington through Thursday.
Earnings include: Abbott Laboratories; CSX Corp.; Discover Financial Services; Kinder Morgan Inc.; Prologis Inc.; Progressive Corp.; U.S. Bancorp
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Thursday April 18
Japan machine tool orders
(8:30 a.m. ET) Canadian household and mortgage credit for February.
(8:30 a.m. ET) U.S. initial jobless claims for week of April 13. Estimate is 215,000, up 4,000 from the previous week.
(8:30 a.m. ET) U.S. Philadelphia Fed Index for April.
(10 a.m. ET) U.S. existing home sales for March. Consensus is an annualized rate drop of 6.3 per cent.
(10 a.m. ET) U.S. leading indicator for March. The Street expects a decline of 0.1 per cent from the previous month.
Earnings include: American Airlines Group Inc.; Blackstone Inc.; Netflix Inc.; Taiwan Semiconductor Manufacturing Co. Ltd.
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Friday April 19
Japan CPI
Germany PPI
(8:30 a.m. ET) Canadian construction investment for February.
Earnings include: American Express Co.; Procter & Gamble Co.; Schlumberger NV
Bank of Canada Governor Tiff Macklem spent much of the past year shooting down speculation about when interest rates will start coming down. On Wednesday, he let his guard slip.
At a news conference following the latest stand-pat rate decision, Mr. Macklem was asked whether a June rate cut was within the realm of possibilities. After a long pause, he responded: “Yes, it’s within the realm of possibilities.”
To the uninitiated, that might seem like a small admission. But in the carefully choreographed language of central bankers – who can move multi-billion dollar markets with the change of an adjective – it was a major signal.
Whether interest rates start coming down in June, July or later depends on the next few inflation reports. And this week’s higher-than-expected inflation data from the United States puts the Bank of Canada in a tricky spot.
But the bank’s governing council has clearly begun debating when to start easing monetary policy. And for the first time since the early months of the pandemic, rate cuts are on the table.
The Globe and Mail sat down with Mr. Macklem several hours after the news conference to ask about rate cuts, a possible divergence between the Bank of Canada and the U.S. Federal Reserve, government spending and why central bank officials are sounding the alarm about Canadian productivity.
The interview has been edited for length and clarity.
Tiff Macklem: Those weren’t my words, those were [Canadian Press reporter Nojoud Al Mallees’ words]. I was asked the question. Look, the answer is yes. It’s not the only possibility. And we’re going to take our decisions one at a time.
I’m not going to put it on a calendar. But we’ve been pretty clear, we’re encouraged by the progress we’ve seen. Since January – you look at all our inflation indicators – some are making more progress than others, but they’re all moving in the right direction. And what we’re looking for is for that to be sustained. We want to be confident that that’s durable. And when we are confident that it’s durable, it will be appropriate.
So we’ll see what decision date that actually happens on. But the message is we’re moving in the right direction. We are getting closer. We’re seeing what we need to see. We just need to see it for longer.
Asia-Pacific markets were mixed Friday after an inflation-fueled selloff in the previous session, with investor assessing economic data from Singapore and South Korea.
Hong Kong’s Hang Seng index led losses in the region, tumbling about 2%, while mainland China’s CSI 300 fell 0.81% to close at 3,475.84.
The losses come as China’s exports for March fell more than expected, declining 7.5% compared to the 2.3% fall expected by economists polled by Reuters. This follows a weaker-than-expected rise in the country’s inflation on Thursday.
Singapore’s first-quarter gross domestic product climbed 2.7% year on year, advance estimates showed, faster than the 2.2% growth recorded in the last quarter of 2023.
The city-state’s central bank held its monetary policy steady, leaving the width and level of its policy band unchanged. In contrast to other countries, Singapore uses exchange rate settings for its monetary policy, instead of a benchmark interest rate.
South Korea’s March unemployment rate rose to 2.8%. The country’s benchmark Kospi index slid 0.93% and ended at 2,681.82, but the small-cap Kosdaq gained 0.28% and closed at 860.47 after South Korea’s central bank kept policy rates unchanged at 3.5%, a 15-year high.
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Japan’s Nikkei 225 climbed 0.21% to 39,523.55, while the broad-based Topix rose 0.46% and ended at 2,759,64. The yen continued to weaken against the dollar, hitting as low as 153.29.
In Australia, the S&P/ASX 200 slipped 0.33% to extend losses from Thursday and end at 7,788.1.
https://www.cnbc.com/2024/04/12/asia-markets-live-updates.html
National Bank of Canada (NA-T -0.80%decrease, Wednesday’s close $112.92) remained in a wide horizontal trading range mostly between $85 and $105 for about two years (dashed lines). Earlier this year, the stock rallied above the top of this range to signal a breakout and the start of a new uptrend toward higher targets (A).
Behaviour indicators, including the rising 40-week Moving Average (40wMA), confirm the bullish status. National Bank is becoming overbought as it rallies far above the 40wMA, which increases the possibility of a minor correction, either in price (toward the average) or in time (horizontal trading range). There is good support near ±$105; only a sustained decline below $100-105 would be negative.
Point & Figure measurements provide an initial target of $124. The large trading range (dashed lines) supports higher targets.
Cenovus Energy CVE-T -3.15%decrease on Thursday said it plans to invest $1.5-billion in its Ohio refineries over the coming five years, including Lima and Oregon.
The investment in Ohio refineries include maintenance, reliability measures and market access projects, the company said.
Cenovus produces oil and natural gas with locations in Canada, the United States and the Asia Pacific region and is the largest refiner in the state of Ohio where it employs almost 1,200.
Cenovus’ Toledo refinery in Oregon, Ohio has a processing capacity of up to 160,000 barrels per day (bpd), according to the company’s website. The Lima refinery has a refining capacity of 183,000 bpd, per the U.S. Energy Information Administration.
Stocks tanked on Wednesday after March inflation data came in hotter than expected, likely pushing off interest rate cuts by the Federal Reserve that investors have been anticipating.
The Dow Jones Industrial Average dropped 436 points, or about 1.2%. The S&P 500 and Nasdaq Composite slid 1.1% and 1.2%, respectively.
The S&P 500 had been treading water in April in anticipation of this inflation report following a roaring start to the year where the benchmark rallied 10% for its best first quarter gain in five years.
The CPI in March rose 0.4% for the month and 3.5% year-over-year, versus estimates of a 0.3% monthly increase and 3.4% year-over-year, according to economists polled by Dow Jones. Core CPI, which excludes volatile food and energy prices, accelerated 0.4% from the previous month while rising 3.8% from a year ago, compared to estimates for 0.3% and 3.7%, respectively. CPI in April increased at a 3.2% annual pace for all items.
Fed funds futures trading data now suggests just a 20.6% likelihood that the Fed will lower rates at its June meeting, according to the CME FedWatch Tool. Traders are now betting that the first rate cut will likely take place at the central bank’s meeting in September.
The 10-year Treasury yield, a benchmark for mortgage and other loans, soared back above 4.5% as March CPI reaccelerated from the prior month, defying a Federal Reserve hoping for inflation to slow back to its 2% target. The 2-year Treasury yield spiked to nearly 5%.
Bank shares, including JPMorgan Chase and industrial shares like Caterpillar, both fell around 1% on worries higher rates will start to suffocate the economy. Once red-hot tech stocks like Nvidia and Meta also pulled back as investors dumped the bull market winners as their Fed rate-cut hopes were dashed.
“Disinflation is out and inflation is in with today’s CPI report,” said Karen Manna, portfolio manager at Federated Hermes. “The forecasts for Fed easing this year will be reassessed even lower.”
“This CPI report provides a jolt to the market. … [but] I don’t think that the CPI-induced sell-off changes the underlying primary trend,” said Keith Lerner, co-chief investment officer at Truist.
To be sure, Lerner added that “if the Fed’s likely going to be on the sidelines a bit longer, we really need the earnings to come through to justify the move that we’ve seen this year.”
In addition to the big inflation report on Wednesday, investors are also looking forward to the meeting minutes from the Fed’s gathering last month. They will be hunting for clues on where policymakers stand on expected rate cuts this year. Those will be released at 2 p.m. ET.
China’s Finance Ministry denounced a report by Fitch Ratings that kept its sovereign debt rated at A+ but downgraded its outlook to negative, saying Wednesday that China’s deficit is at a moderate and reasonable level and risks are under control.
Risks to China’s public finances are rising, Fitch said, as Beijing works to resolve mounting local and regional government debts and to shift away from heavy reliance on its troubled property industry to drive economic growth.
But while slower growth is adding to the challenges of coping with heavy borrowing, Fitch said it kept China’s A+ rating due to its “large and diversified economy,” its vital role in global trade and its huge foreign exchange reserves.
The Finance Ministry said it was a “pity” that Fitch had downgraded its sovereign debt and faulted its methods, saying it had failed to take into account Beijing’s moves toward “appropriately intensifying, improving quality and efficiency” of its government spending.
“In the long run, maintaining a moderate deficit and making good use of precious debt funds will help expand domestic demand, support economic growth, and ultimately help maintain good sovereign credit,” the ministry said.
“Overall, our country’s local government debt resolution work is progressing in an orderly manner and risks are generally controllable,” it said.
Fitch’s report noted that China’s general government deficit was forecast to rise this year to 7.1 per cent of its GDP, up from 5.8 per cent in 2023. The median for countries with an “A” rating is 3.0 per cent, it said. China’s average deficit to GDP ratio averaged 3.1 per cent in 2015-2019 but jumped to 8.6 per cent in 2020, during the COVID-19 pandemic.
Tax relief measures and weaker property investments, which are usually a main source of local tax revenue, have eroded the government’s capacity to collect tax revenues to offset higher spending, the report said.
Fitch forecasts that China’s economy will expand at a 4.5 per cent annual rate this year, down from 5.2 per cent last year, due to the downturn in the property sector and lacklustre consumer spending, though it said higher government spending is likely to help make up for some of that weakness.
While the government has moved to support some property developers struggling to repay their debts after a crackdown on excessive borrowing, analysts have warned that the financial troubles are now rippling across construction companies and other industries linked to real estate.
Another ratings agency, Moody’s, downgraded China’s credit rating outlook in December, ING economists noted in a report Wednesday.
It said that “in general we can observe that the debt situation has worsened rapidly since the pandemic.”
Fitch’s move reflects the dilemma all policy-makers face, it said.
“Failing to restore growth and confidence would weaken the GDP side of the debt to GDP equation, and could have an equally harmful impact on long-term debt sustainability,” it said. “However, it is important that fiscal spending from this point onward is directed toward productive areas of growth for the future.”
The Bank of Canada (BoC) is expected to hold its key overnight rate steady on Wednesday, with economists and analysts hoping to get some direction on the timing of its first rate cut.
The central bank has kept borrowing costs on hold at a 22-year high of 5% for its last five consecutive meetings in its bid to
It is widely expected to repeat it for the sixth time but markets will be eagerly sifting through Governor Tiff Macklem’s speech for a hint of when it plans to pivot to a rate cut cycle.
With inflation showing signs of cooling since the beginning of the year and the latest job market survey pointing at build up of some slack, traders have increased their bets for a rate cut in June.
Economists and analysts expect to get some clarity from the central bank, which had said last month it was too early to consider cuts, on the direction of inflation, growth and the first 25-basis point rate cut.
“The key points to watch on Wednesday will be how Governing Council characterizes inflation and how their discussions about the near-term path of policy have evolved,” Royce Mendes, head of macro strategy for Desjardins Group, wrote in a note.
The central bank’s Governing Council will announce its monetary policy decision on April 10 at 9:45 a.m. (1345 GMT) when it will also come out with its quarterly monetary policy report giving projections on the economy and inflation.
Canadian economic data has diverged from its biggest trading partner, the U.S., and much of the growth seen south of its border has not trickled into the Canadian market.
This has prompted traders to forecast the first rate cut to begin in Canada with money markets betting there will be an 85% chance of a rate cut in June. The chances of a mid-year rate cut in the U.S., however, has shrunk to 60%.
“We expect that the central bank’s first rate cut will occur in June and that there will be a total of four this year … but the tone of its statement (on Wednesday) will shift to dovish,” said Tu Nguyen, economist with assurance, tax & consultancy firm RSM Canada.
In a Reuters poll, more than 70% of economists, 27 out of 38, expected the BoC to deliver its first rate cut in June, in line with market pricing. Seven predicted the first cut would come in July, and the remaining four said September.
While high interest rates have managed to ease inflationary pressures in the country from a high of 8.1% seen in June 2022 to 2.8% in February, it has increased mortgage cost, the most common debt held by Canadians.