• U.S. President Donald Trump called last week for a 50% tariff on EU goods to begin on June 1, but has since delayed the roll out of the duties to July 9.
• European stocks rebounded Monday morning, moving into positive territory, after previously sinking on Friday in response to Trump’s fresh tariffs threats.
• However, market watchers warned that the threat of tariff escalation between the U.S. and the EU is not yet over.

https://www.cnbc.com/2025/05/26/trump-delays-eu-tariffs-but-more-volatility-could-be-on-the-way.html

Monday May 26

U.S. markets closed (Memorial Day)

(8:30 a.m. ET) Canadian construction investment for March.

(8:30 a.m. ET) Canadian manufacturing sales for March.

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Tuesday May 27

China industrial profits

Euro zone economic and consumer confidence

(8:30 a.m. ET) Canadian wholesale trade for April

(8:30 a.m. ET) U.S. durable goods orders for April. The Street is projecting a drop of 8.2 per cent from March.

(9 a.m. ET) U.S. S&P CoreLogic Case-Shiller Home Price Index for March.

(9 a.m. ET) U.S. FHFA House Price Index for March.

(10 a.m. ET) U.S. Conference Board Consumer Confidence Index for May.

Earnings include: Bank of Nova Scotia.

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Wednesday May 28

Germany employment

(2 p.m. ET) U.S. Fed minutes released.

Earnings include: Bank of Montreal; Champion Iron Ltd.; EQB Inc.; HP Inc.; National Bank of Canada; Nvidia Corp.; Salesforce Inc.

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Thursday May 29

Japan consumer confidence

(8:30 a.m. ET) Canada’s current account balance for Q1.

(8:30 a.m. ET) Canada’s Survey of Employment, Payrolls and Hours for March.

(8:30 a.m. ET) U.S. initial jobless claims for the week of May 24.

(8:30 a.m. ET) U.S. Real GDP for Q1. The Street currently expects a decline of 0.3 per cent year-over-year.

(10 a.m. ET) U.S. pending home sales for April.

Earnings include: BRP Inc.; Canadian Imperial Bank of Commerce; Dell Technologies Inc.; Lululemon Athletica Inc.; Marvell Technology Inc.; Royal Bank of Canada.

–

Friday May 30

China PMI

Japan CPI, industrial profits and retail sales

(8:30 a.m. ET) Canada’s Real GDP for Q1. Estimate is a rise of 1.5 per cent (compared to a 2.6-per-cent gain a year ago).

(8:30 a.m. ET) Canada’s monthly Real GDP for March. Estimate is an increase of 0.1 per cent (versus a decline of 0.2 per cent in the previous month).

(8:30 a.m. ET) U.S. personal income and consumption for April. The Street is projecting month-over-month gains of 0.3 per cent and 0.2 per cent, respectively.

(8:30 a.m. ET) U.S. retail and wholesale inventories for April.

(9:45 a.m. ET) U.S. Chicago PMI for May.

(10 a.m. ET) U.S. University of Michigan Consumer Sentiment Index for May.

Earnings include: Canopy Growth Corp.; Costco Wholesale Corp.; Laurentian Bank of Canada

Bank of Nova Scotia BNS-T +0.07%increase reported lower second-quarter profit that missed analysts’ estimates as the lender set aside more provisions for loan defaults as the U.S. trade war puts pressure on consumers and businesses.

Scotiabank earned $2.03-billion, or $1.48 per share, in the three months that ended April 30. That compared with $2.09-billion, or $1.57 per share, in the same quarter last year.

Adjusted to exclude certain items, the bank said it earned $1.52 per share. That fell below the $1.57 per share analysts expected, according to S&P Capital IQ.

In the quarter, Scotiabank set aside $1.4-billion in provisions for credit losses – the funds banks set aside to cover loans that may default. That was higher than analysts anticipated, and included $346-million against loans that are still being repaid, based on models that use economic forecasting to predict future losses.

In the same quarter last year, Scotiabank posted $1-billion in provisions.

“Amidst the continuously-evolving economic outlook, we are focused on what we can control and are executing on our strategic plan while continuing to deliver positive operating leverage,” Scotiabank CEO Scott Thomson said in a statement. “This quarter we increased our performing allowances to reflect the impact of an uncertain macroeconomic outlook.”

Analysts expected Canada’s banks to continue grappling with higher loan loss reserves and lower borrowing activity as U.S. President Donald Trump’s trade war threatens a deeper economic downturn.

The bank raised its quarterly dividend by 4 cents to $1.10 per share. Scotiabank also said it plans to buy back 20 million of its shares.

Scotiabank is the second major Canadian bank to report earnings for the fiscal second quarter. Last week, Toronto-Dominion Bank posted results that beat analyst estimates. Bank of Montreal and National Bank of Canada report Wednesday, and Royal Bank of Canada and Canadian Imperial Bank of Commerce release results on Thursday.

Total revenue rose 9 per cent in the quarter to $9.08-billion. But expenses increased 8 per cent to $5.11-billion, which the bank said was driven by higher technology and professional fees, personnel costs, and performance and stock-based compensation.

Profit from Canadian banking dropped 31 per cent to $613-million as the bank set aside more provisions for performing loans. Loan balances were up 4 per cent year over year.

Profit from the bank’s international division was up 6 per cent, at $676-million, driven by higher non-interest income, lower expenses, provision for credit losses and income taxes.

Capital markets profit rose 10 per cent to $413-million on a boost in trading revenue. The global wealth management division generated $399-million, up 17 per cent.

The Conference Board released a report on Monday showing its reading on leading U.S. economic indicators slumped by more than expected in the month of April.

The report said the leading economic index tumbled by 1.0 percent in April after sliding by a downwardly revised 0.8 percent in March.

Economists had expected the leading economic index to decrease by 0.8 percent compared to the 0.7 percent drop originally reported for the previous month.

“The U.S. LEI registered its largest monthly decline since March 2023, when many feared the US was headed into recession, which did not ultimately materialize,” said Justyna Zabinska-La Monica, Senior Manager, Business Cycle Indicators, at The Conference Board.

“Most components of the index deteriorated,” she added. “Notably, consumers’ expectations have become continuously more pessimistic each month since January 2025, while the contribution of building permits and average working hours in manufacturing turned negative in April.”

Meanwhile, the Conference Board said its coincident economic index inched up by 0.1 percent in April after rising by 0.3 percent in March.

The report said the lagging economic index also rose by 0.3 percent in April after edging down by 0.1 percent in the previous month.

Australia’s central bank lowered its benchmark rate by a quarter-point for the second time this year as risks to inflation became more balanced, while uncertainties regarding economic outlook increased due to trade protectionism measures.

The policy board of the Reserve Bank of Australia, governed by Michele Bullock, decided to cut the cash rate target to 3.85 percent from 4.10 percent.

The current rate was the lowest in two years. Previously, the bank had reduced the rate by 25 basis points in February, which was the first cut since 2020.

The board judged that the risks to inflation became more balanced. Inflation reached the target band and upside risks appear to have diminished as international developments are set to weigh on the economy, the board observed.

“The Board assesses that this move will make monetary policy somewhat less restrictive,” the bank said.

Further, policymakers observed that the monetary policy is well placed to respond decisively to international developments if they were to have material implications for activity and inflation.

Headline inflation is forecast to rise over the coming year to around the top of the band as temporary factors unwind and underlying inflation is projected to be around the midpoint of the 2-3 percent range throughout much of the forecast period.

The People’s Bank of China reduced its benchmark interest rate for the first time in seven months to stimulate consumption and support the property market amid soothing trade tensions.

The central bank lowered its one-year loan prime rate by 10 basis points to 3.0 percent from 3.10 percent.

Likewise, the five-year LPR, the benchmark for mortgage rates, was reduced to 3.50 percent from 3.60 percent.

The bank had cut its both LPRs by 25 basis points each in October 2024.

The PBoC fixes the LPR monthly based on the submission of 18 designated banks. However, Beijing has influence over the fixing. The LPR replaced the traditional benchmark lending rate in August 2019.

The end of the consumer carbon price at the start of April drove inflation down sharply, Statistics Canada said Tuesday, but there were signs of pressure building at the grocery store.

The annual pace of inflation cooled to 1.7 per cent last month, down from 2.3 per cent in March, the agency said. That’s a little higher than the 1.6 per cent expected by a poll of economists.

But with a Bank of Canada interest rate decision set for early June, market odds flipped in favour of another rate hold from the central bank in response to the inflation data.

How today’s hotter-than-expected inflation report has shifted market bets and economist views for future BoC rate cuts

Canadians were primarily finding relief at the gas pumps in April.

Statistics Canada said gas prices fell 18.1 per cent year-over-year in April, thanks mostly to the end of the carbon price, but also because global oil prices fell amid declining demand and higher production from OPEC countries. Natural gas prices also fell 14.1 per cent annually in the month.

Excluding energy from the consumer price index, StatCan said inflation would have come in at 2.9 per cent for April – an increase from 2.5 per cent for the same calculation in March.

The only province that didn’t experience a slowdown in inflation last month was Quebec, a province that has its own cap-and-trade system and therefore didn’t benefit from the end of the federal carbon price regime.

But while consumers found it cheaper to gas up in April, pressure was building at the grocery store.

Prices for food bought from the store rose 3.8 per cent last month, StatCan said, accelerating from 3.2 per cent in March.

On an annual basis, prices for fresh vegetables rose 3.7 per cent, the cost of fresh and frozen beef was up 16.2 per cent and prices of coffee and tea rose 13.4 per cent, the agency said.

Grocery store inflation has now outpaced the overall consumer price index for three months in a row.

Canadian travellers also felt the pinch as travel tour prices rose 3.7 per cent monthly in April, reversing course after a decline of eight per cent in March.

The April inflation figures come a little more than two weeks before the Bank of Canada is set to make its next interest rate decision on June 4.

The central bank held its policy rate steady at 2.75 per cent last month, saying then that it needed more time to see how Canada’s trade war with the United States was impacting the economy.

Financial market odds of an interest-rate cut in June fell to just under 40 per cent Tuesday morning, compared with roughly 64 per cent at the end of last week, according to LSEG Data & Analytics.

While the headline inflation figures showed signs of easing in April, the Bank of Canada’s preferred measures of core inflation, which strip out influences like the end of the carbon price, accelerated to top three per cent in the month.

CIBC senior economist Andrew Grantham said in a note to clients Tuesday that the central bank will be watching that trend carefully, alongside indications that the tariff dispute was starting to bite Canada’s labour market.

StatCan reported earlier this month that the national unemployment rate rose to 6.9 per cent in April as the trade-sensitive manufacturing sector took a hit.

“Signs of renewed weakening in the economy on one hand, as shown by the latest employment data, but stronger core inflation on the other makes for a tough decision for the Bank of Canada at its early June meeting,” Grantham said.

TD Bank senior economist Andrew Hencic said in a note that signs of a resurgence in core inflation might mean that the tariff hit could be showing up sooner than anticipated in the price data.

Like Grantham, Hencic said the April inflation report “complicates” the Bank of Canada’s decision making.

The central bank typically raises its policy rate to tamp down price pressures and lowers it to encourage economic growth; policy-makers have made clear they can’t effectively lean against both a slowing economy and a resurgence in inflation at the same time in a trade war.

Hencic said TD sees two additional interest rate cuts from the Bank of Canada this year.

Canada Post says it has received strike notices from the union representing 55,000 postal workers.

The Crown corporation says the notices state that employees plan to hit the picket line starting Friday at midnight.

• The index of consumer sentiment dropped to 50.8, down from 52.2 in April and hitting its second-lowest reading on record.
• The majority of the survey was completed before the U.S. and China announced a 90-day pause on most tariffs between the two countries.
• The trade situation appears to be a key factor weighing on consumer sentiment.

https://www.cnbc.com/2025/05/16/consumer-sentiment-may-inflation-expectations-tariffs.html