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Cooling inflation will likely keep the Federal Reserve on pause in coming months, traders bet on Friday, even as persistent underlying price pressures amid strong consumer spending kept some chance of a rate hike later this year in play.

The personal consumption expenditures price index, which is the Fed’s preferred inflation gauge, rose 3.4% in September from a year earlier, a Commerce Department’s Bureau of Economic Analysis report showed on Friday, and the core PCE price index, which the Fed takes a signal for future price pressures, rose 3.7%. That’s down from a 3.8% reading in August but well above the Fed’s 2% inflation target.

Consumer spending rose 0.7% in September from August, more than economists expected.

Still, traders continue to price in no chance the Fed will lift its policy rate from the current 5.25%-5.5% range at next week’s rate-setting meeting, and less than a 20% chance of an increase by the Fed’s December meeting, based on futures contracts that settle to the U.S. central bank’s target policy rate.

“Overall, spending remains positive, and inflation is slowing, a welcome combination for policymakers,” wrote analysts at High Frequency Economics. “We continue to expect a slower pace of growth going forward and a further easing in price pressures, which should keep the FOMC on the sidelines for the rest of 2023.”

Traders continue to expect a first Fed rate cut in June of next year, based on interest-rate futures pricing.

Fortis Inc. reported a third-quarter profit of $394 million, up from $326 million a year earlier.

The gas and power utility says the profit amounted to 81 cents per diluted share for the quarter ended Sept. 30, up from 68 cents per diluted share in the same period of 2022.

Revenue for the quarter totalled $2.72 billion, up from $2.55 billion.

On an adjusted basis, Fortis says it earned 84 cents per share in its latest quarter compared with an adjusted profit of 71 cents per share a year earlier.

The company says its increased profits reflect the new cost of capital parameters approved for the FortisBC utilities in September 2023, higher retail revenue in Arizona due to warmer weather and new customer rates at Tucson Electric Power, and rate base growth across its utilities.

It says earnings were tempered by lower long-term wholesale and transmission revenue, as well as higher operating and corporate finance costs.

This report by The Canadian Press was first published Oct. 27, 2023.

Imperial Oil Ltd. says it earned $1.6 billion in the third quarter of 2023, down from $2.0 billion in the prior year’s quarter.

The Calgary-based oil company says its profit worked out to $2.76 per share, compared with $3.24 per share in the same three-month period of 2022.

Imperial reported upstream production in the third quarter of 423,000 gross oil-equivalent barrels per day on average.

The company’s Kearl oilsands site reported its highest-ever quarterly production at 295,000 total gross oil-equivalent barrels per day.

Refinery throughput in the quarter averaged 416,000 barrels per day with refinery capacity utilization of 96 per cent.

Imperial says its quarterly cash flow from operating activities was $2.4 billion.

This report by The Canadian Press was first published Oct. 27, 2023.

Air Canada AC-T reported surging profits in its latest quarter as consumers continued to spend on travel, despite higher inflation and interest rates weighing on their wallets.

The country’s biggest airline saw net income for its third quarter jump to $1.25-billion from a half-billion-dollar loss in the same period a year earlier.

On Monday, chief executive Michael Rousseau said demand remains “very stable.”

Passenger revenues for the quarter ended Sept. 30 leaped 22 per cent year-over-year, he said. Adjusted earnings also surpassed those from 2019, the last year before the COVID-19 pandemic wreaked havoc on the travel industry.

The frothy earnings arrived despite lower flight capacity than four years ago and business from corporate customers sitting 25 per cent to 30 per cent below pre-pandemic demand, said network planning head Mark Galardo.

The smaller fleet may have contributed to a relatively weak on-time performance, which saw Air Canada rank ninth out of 10 major North American airlines, according to aviation data firm Cirium. Some 68 per cent of the carrier’s 32,000-plus flights in September arrived on time, versus between 76 per cent and 86 per cent for the top seven airlines, including WestJet.

Rousseau pointed to Air Canada’s nearly 90 per cent load factor – a key metric measuring the proportion of available seats filled by passengers – as one reason for the delays.

“While this signals that we use our assets very effectively, one consequences is it puts extra pressure on the operations. That said, our on-time performance progressively improved throughout the quarter,” he told analysts on a conference call.

Executives also acknowledged stiffening competition in the domestic, cross-border and sun destination markets, as Porter Airlines, Lynx Air and Flair Airlines embark on rapid expansions.

“Competition will continue to evolve. In particular, we’ve seen some moves into seasonal markets,” Galardo said, referring to those airlines’ heightened focus on sun-splashed getaways.

“We know we must continue to invest in our business and continuously improve to remain competitive and attract customers and maintain their loyalty,” Rousseau added.

Net income amounted to $3.08 per diluted share for the quarter ended Sept. 30 compared with a loss of $1.42 per diluted share a year earlier, the airline said.

Operating revenue totalled $6.34-billion, up 19 per cent from $5.32-billion in the same quarter last year, boosted by higher passenger revenues.

On an adjusted basis, Air Canada says it earned $3.41 per diluted share in its latest quarter compared with an adjusted profit of $1.07 per diluted share in the same quarter last year, far exceeding analyst predictions.

Analysts on average had expected an adjusted profit of $2.15 per share for the quarter, according to estimates compiled by financial markets data firm Refinitiv.

In its outlook, Air Canada said its adjusted cost per available seat mile for 2023 is expected to be about 1.5 per cent to 2.25 per cent above 2022 levels compared with earlier expectations its adjusted CASM would rise 0.5 per cent to 1.5 per cent.

https://www.ctvnews.ca/video?clipId=2795932&playlistId=1.6621171&binId=1.810401&playlistPageNum=1&binPageNum=1

GDP surges past expectations in Q3, recession less likely

Gross domestic product (GDP) in the third quarter of 2023 increased at more than twice the rate of growth in the previous quarter, once again beating the odds of a recession, according to the Bureau of Economic Analysis (BEA). 

Real GDP increased at an annual rate of 4.9% for the July-through-September period after rising 2.1% in the second quarter this year, according to the BEA’s advance estimate released Thursday. Economic forecasts had called for a 4.7% acceleration in GDP for the third quarter of 2023. The increase in economic growth comes as the Federal Reserve has raised interest rates 11 times since March of last year, pushing the federal funds rate to a 22-year high of 5.25% to 5.5% in a bid to slow the economy and lower soaring inflation. 

The increase in real GDP reflected increases in consumer spending, private inventory investment, exports, state and local government spending, federal government spending and residential fixed investment, partly offset by a decrease in nonresidential fixed investment, the BEA said. The increase in consumer spending reflected increases in both services and goods. 

“There are two factors contributing to this strong growth,” MBA SVP and Chief Economist Mike Fratantoni said in a statement. “First, consumer spending on goods and services remained quite strong. Some of the strength is due to a big increase in spending on durable goods as well as a pickup in estimated spending on housing and utilities. 

However, this spending rate is not likely to be sustainable over time as the excess savings consumers saved during the pandemic continue to drop and wage gains decelerate, according to Fratantoni. 

“We are now seeing some consumer stress in the rising delinquency rates for credit cards and auto loans,” Fratantoni said.

The other growth driver was a significant increase in private inventories, which Fratantoni said can often be reversed in the following quarter and is likely to contribute to slower growth in the fourth quarter.

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GDP surges past expectations in Q3, recession less likely | Fox Business

• The Canadian Dollar is falling back for the second day in a row as markets shy away from risk.
• BoC sees a period of negative growth over the horizon.
• Despite a weakening economy, BoC is hampered on policy by increasing inflation risks.
• USD/CAD reaches seven-month high on Wednesday.

The Canadian Dollar (CAD) is down once again on Wednesday, adding to yesterday’s declines and sending the USD/CAD back into the 1.2800 handle as the Bank of Canada (BoC) holds rates steady as markets broadly expected.

The Bank of Canada (BoC) held its main reference rate at 5.0% Wednesday morning like Wall Street broadly predicted, but dovish comments from BoC Governor Tiff Macklem are failing to spark much confidence in the Loonie. 

The BoC is expecting “two or three quarters” of negative growth as a recession looms over the Canadian economy, with Governor Macklem specifically noting that odds of achieving a soft landing are beginning to decrease.

Broad-market risk aversion is the name of the game as Tuesday’s risk-off flows continue for a second day, sending the US Dollar (USD) higher. Crude Oil prices, however, are finding a floor for Wednesday, helping to limit losses for the oil-backed CAD.

https://www.fxstreet.com/news/canadian-dollar-backslides-again-as-dovish-boc-holds-rates-flat-expecting-negative-growth-202310251651

https://www.cnbc.com/2023/10/28/israel-hamas-war-gaza-live-updates.html

Monday October 30

Euro zone economic confidence

Germany’s real GDP and consumer prices

Bank of Japan’s monetary policy meeting (through Tuesday).

(10:30 a.m. ET) U.S. Dallas Fed Manufacturing Activity for October.

(3:30 p.m. ET) Bank of Canada Governor Tiff Macklem and Senior Deputy Governor Carolyn Rogers appear before the House Standing Committee on Finance.

Earnings include: Air Canada; Gibson Energy Inc.; McDonald’s Corp.; TMX Group Ltd.; Topaz Energy Corp.; Toromont Industries Ltd.

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Tuesday October 31

China manufacturing PMI

Japan jobless rate, retail sales and industrial production

(8:30 a.m. ET) Canada’s monthly real GDP for August. The Street is projecting an increase of 0.1 per cent from July.

(8:30 a.m. ET) U.S. employment cost index for Q3. The consensus is a rise of 1.0 per cent from Q2 and up 4.3 per cent year-over-year.

(9 a.m. ET) U.S. S&P CoreLogic Case-Shiller Home Price Index for August. Consensus is a rise of 0.8 per cent from July and up 2.0 per cent year-over-year.

(9 a.m. ET) U.S. FHFA House Price Index for August. The Street is estimating an increase of 0.5 per cent month-over-month and up 5.4 per cent year-over-year.

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

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

Also: U.S. Fed meeting begins

Earnings include: Amgen Inc.; Advanced Micro Devices Inc.; Caterpillar Inc.; Centerra Gold Inc.; First Capital Realty Inc.; First National Financial Corp.; International Petroleum Corp.; Pfizer Inc.; Stellantis NV

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Wednesday November 1

(8:15 a.m. ET) U.S. ADP National Employment Report for October. Estimate is an increase of 150,000 jobs (versus a rise of 89,000 in September).

(9:30 a.m. ET) Canada’s S&P global manufacturing PMI for October.

(9:45 a.m. ET) U.S. S&P global manufacturing PMI for October.

(10 a.m. ET) U.S. ISM manufacturing PMI for October.

(10 a.m. ET) U.S. construction spending for September. Consensus is a month-over-month rose of 0.4 per cent/

(10 a.m. ET) U.S. Job Openings & Labor Turnover Survey for September.

(2 p.m. ET) U.S. Fed announcement with chair Jerome Powell’s press conference to follow.

(4:15 p.m. ET) Bank of Canada Governor Tiff Macklem and Senior Deputy Governor Carolyn Rogers appear before the Senate Standing Committee on Banking, Commerce and the Economy.

Also: Canadian and U.S. auto sales for October.

Earnings include: Airbnb Inc.; Bausch + Lomb Corp.; Canada Goose Holdings Inc.; Capital Power Corp.; Cenovus Energy Inc.; Ceridian HCM Holding Inc.; Cogeco Inc.; Cogeco Communications Inc.; CVS Health Corp.; Estee Lauder Companies Inc.; GFL Environmental Holdings Inc.; IGM Financial Inc.; InterRent REIT; Kinaxis Inc.; Mondelez International Inc.; NexGen Energy Ltd.; Nutrien Ltd.; Parkland Fuel Corp.; PayPal Holdings Inc.; Qualcomm Inc.; Secure Energy Services Inc.; Spin Master Corp.; SSR Mining Inc.; Vermilion Energy Inc.

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Thursday November 2

China’s current account surplus

Bank of England’s monetary policy announcement

(8:30 a.m. ET) U.S. initial jobless claims for week of Oct. 28. Estimate is 210,000, flat from the previous week.

(8:30 a.m. ET) U.S. productivity and unit labour costs for Q3. Consensus estimates are annualized rate increases of 4.0 per cent and 0.7 per cent, respectively.

(10 a.m. ET) U.S. factory orders for September. The Street is expecting a month-over-month increase of 1.7 per cent.

Also: Ontario’s fall economic statement

Earnings include: Apple Inc.; Barrick Gold Corp.; Bausch Health Companies Inc.; Baytex Energy Corp.; BCE Inc.; Bombardier Inc.; Canadian Natural Resources Ltd.; Canfor Corp.; Colliers International Group Inc.; ConocoPhillips; Crescent Point Energy Corp.; Eli Lilly and Co.; Ero Copper Corp.; Fairfax Financial Holdings Ltd.; First Majestic Silver Corp.; Gildan Activewear Inc.; Interfor Corp.; Labrador Iron Ore Royalty Corp.; Lightspeed Commerce Inc.; Maple Leaf Foods Inc.; Open Text Corp.; Pason Systems Inc.; Pembina Pipeline Corp.; Primo Water Corp.; RioCan REIT; Shopify Inc.; Starbucks Corp.

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Friday November 3

Japan’s markets closed

Euro zone jobless rate

Germany’s trade surplus

(8:30 a.m. ET) Canadian employment for October. The Street expects an increase of 0.1 per cent, or 25,000 jobs, from September with the unemployment rate rising 0.1 per cent to 5.6 per cent.

(8:30 a.m. ET) U.S. nonfarm payrolls for October. Consensus is an increase of 180,000 jobs from September with the unemployment rate remaining 3.8 per cent.

(9:45 a.m. ET) U.S. S&P global services and composite PMI for October.

(10 a.m. ET) U.S. ISM services PMI for October.

Earnings include: Alibaba ADR; AltaGas Ltd.; Arc Resources Ltd.; Brookfield Business Partners LP; Brookfield Renewable Partners LP; Cameco Corp.; Capstone Mining Corp.; Enbridge Inc.; Energy Fuels Inc.; Magna International Inc.; Restaurant Brands International Inc.; Telus International Inc.; TransAlta Renewables Inc.; Westshore Terminals Investment Corp.