Category: Uncategorized

https://www.msn.com/en-ca/video/money/canadian-banks-poised-for-0-25-interest-rate-hike-lot-of-pain-yet-to-come-economist-says/vi-AA1dBZ5d?ocid=msedgntp

Monday July 10

China’s aggregate yuan financing, new loans, money supply, CPI and PPI

Japan’s bank lending

(8:30 a.m. ET) Canadian building permits for May. Estimate is a month-over-month increase of 0.5 per cent.

(10 a.m. ET) U.S. wholesale inventories for May. Estimate is a decline of 0.1 per cent from April.

(3 p.m. ET) U.S. consumer credit for May.

—

Tuesday July 11

Japan machine tool orders

Germany CPI

(6 a.m. ET) U.S. NFIB Small Business Economic Trends Survey for June.

Earnings include: MTY Food Group Inc.

—

Wednesday July 12

China trade surplus

(8:30 a.m. ET) U.S. CPI for June. The Street is expecting an increase of 0.3 per cent from May and up 3.1 per cent year-over-year.

(10 a.m. ET) Bank of Canada policy announcement and Monetary Policy Report with governor Tiff Macklem’s press conference to follow.

(2 p.m. ET) U.S. Fed Beige Book is released.

—

Thursday July 13

Japan department store sales

Euro zone industrial production

ECB minutes from June 15 meeting are released

(8:30 a.m. ET) U.S. initial jobless claims for week of July 8. Estimate is 248,000, flat from the previous week.

(8:30 a.m. ET) U.S. PPI final demand for June. Consensus is an increase of 0.2 pr cent from May and up 0.4 per cent year-over-year.

(2 p.m. ET) U.S. budget deficit for June.

Earnings include: Cintas Corp.; Cogeco Communications Inc.; Cogeco Inc.; Delta Air Lines Inc.; PepsiCo Inc.; Progressive Corp.; Taiwan Semiconductor Manufacturing

—

Friday July 14

Japan industrial production

Euro zone trade balance

(8:30 a.m. ET) Canadian manufacturing sales and new orders. The Street is expecting month-over-month increases of 0.8 per cent and 1.0 per cent, respectively.

(8:30 a.m. ET) Canadian existing home sales and average prices. Estimate is year-over-year rises of 3.5 per cent and 6.0 per cent, respectively.

(8:30 a.m. ET) U.S. import prices for June. Consensus is a drop of 0.1 per cent from May and down 6.2 per cent year-over-year.

(9 a.m. ET) Canada’s MLS Home Price Index for June. Estimate is a decline of 4.0 per cent year-over-year.

(10 a.m. ET) U.S. University of Michigan Consumer Sentiment Survey for July (preliminary reading)

Earnings include: Blackrock Inc.; Citigroup Inc.; JPMorgan Chase & Co.; State Street Corp.; UnitedHealth Group Inc.; Wells Fargo & Co.

• Nonfarm payrolls increased 209,000 in June, below the consensus estimate for 240,000.
• The unemployment rate was 3.6%, down 0.1 percentage point. However, a more encompassing jobless level rose to 6.9%.
• Government hiring led the job gains, followed by health care, social assistance and construction.
• Wages rose 4.4% from a year ago, slightly higher than expectations.

https://www.cnbc.com/2023/07/07/jobs-report-june-2023-.html

Canada’s unemployment rate ticked up to 5.4 per cent in June – the highest it’s been in over a year.

It marked the second month in a row the unemployment rate has risen as economists watch for softening in the labour market amid high interest rates.

Statistics Canada said Friday the increase came as the economy added 60,000 jobs in June, driven by gains in full-time work.

But with more people searching for work and Canada’s population growing, the unemployment rate climbed higher.

Job gains were concentrated in wholesale and retail trade, manufacturing, health care and social assistance and transportation and warehousing.

The loosening of the labour market likely comes as good news to the Bank of Canada, which is looking for signs that its aggressive rate hikes are working to cool the economy.

The central bank has said repeatedly that Canada’s hot labour market is contributing to high inflation, raising concerns about the pace of wage growth in particular.

However, Statistics Canada said wage growth also softened last month, rising 4.2 per cent from a year ago. That compared with a year-over-year gain of 5.1 per cent in May.

The central bank is gearing up for its interest rate decision next week. Its move to raise interest rates last month has led many forecasters to expect another rate hike on July 12.

The central bank hasn’t given any clear indication of its plans, saying it will make its decision based on the economic data.

Its key interest rate is at 4.75 per cent, the highest it has been since 2001.

Oil prices rose on Friday and were on track for their second straight weekly gain, as resilient demand resulted in a larger-than-expected fall in U.S. oil stockpiles, offsetting fears of higher U.S. interest rates.

Brent crude futures were up 36 cents, or 0.5%, at $76.88 a barrel at 1114 GMT, while U.S. West Texas Intermediate crude gained 35 cents, or 0.5%, to $72.15 a barrel.

Both benchmarks were set to gain over 2% on the week.

Brent’s six-month backwardation, where nearby contracts trade above later ones indicating supply tightness, has risen sharply in recent sessions and touched a one-month high on Friday.

But Brent is still trading around $10 a barrel below April peaks, and has remained between around $71 and $79 a barrel since early May in the face of interest rate hikes and weak Chinese economic data.

U.S. crude stocks fell more than expected and gasoline inventories posted a large draw, the Energy Information Administration said on Thursday. [EIA/S]

Top oil exporters Saudi Arabia and Russia this week have also announced fresh output cuts bringing total cuts by OPEC and its allies to around five million barrels per day (bpd), equating to 5% of global oil demand.

OPEC will likely maintain an upbeat view on oil demand growth for next year, sources close to OPEC said.

However, oil price gains were capped by strengthening expectations that the U.S. Federal Reserve is likely to raise interest rates at its July 25-26 meeting, which could weigh on growth and thus oil demand.

The number of Americans filing new claims for unemployment benefits increased moderately last week, while private payrolls surged in June, data showed on Thursday.

More U.S. employment data is due at 1230 GMT.

“For as long as market participants fear that oil demand growth will slow considerably as interest rates are being raised and economic data remain disappointing in China … they are unlikely to share the concerns of any significant market tightening,” Commerzbank analysts wrote in a note.

Investors will look for cues on rate paths from U.S. and Chinese inflation data next week.

Canada’s trade balance for goods swung unexpectedly into negative territory in May, producing the largest trade deficit since October, 2020, and acting as an anchor on economic growth in the second quarter.

Led by a decline in energy and agriculture exports, Canada posted a $3.4-billion merchandise trade deficit in May, down from a revised $894-million surplus in April, Statistics Canada reported Thursday. Bay Street forecasters had expected a $1.15-billion surplus that month.

Goods exports declined 3.8 per cent due to both falling prices and lower shipments. In volume terms, exports decreased 2.5 per cent. Meanwhile, imports were up 3 per cent overall and 3.5 per cent in volume terms. (A trade deficit occurs when imports exceed exports).

Trade has been a meaningful contributor to GDP growth so far this year, and a decline in exports could weigh on economic momentum in the second quarter, Stephen Brown, deputy chief North America economist at Capital Economics, wrote in a note to clients.

“The slump in export volumes presents downside risks to the preliminary estimate that GDP rose strongly in May, and suggests that the earlier boost from easing supply shortages is now largely behind us,” Mr. Brown wrote. “With the survey-based orders evidence still weak, exports seem likely to fall further in the coming quarters.”

The drop in exports was led by oil and food. Crude oil exports fell 8.3 per cent – largely on lower prices – while exports of farm, fishing and intermediate food products decreased 13.4 per cent. Worldwide demand for Canadian wheat and canola has slumped in recent months, Statscan noted, yielding lower prices and incentivizing farmers to store their harvests and wait for market conditions to improve.

Meanwhile, imports remained robust, highlighting the continuing strength of Canadian consumers. Vehicle and car part imports rose 4.5 per cent in May, reflecting improving auto-manufacturing supply chains and sustained demand for new vehicles.

Metal imports also jumped thanks to unusually large shipments of silver from Britain to Canada. “Like gold, demand for silver tends to increase in times of economic uncertainty,” Statscan said.

Canadian trade faces headwinds over the summer and into the fall. While the country’s major trading partners have so far avoided a recession, central banks around the world continue to raise interest rates to slow economic growth and curb inflation. Most forecasters expect the U.S. economy – the destination for most Canadian exports – to slow in the second half of the year.

The continuing strikes at ports in British Columbia could also weigh on trade, Bank of Montreal senior economist Robert Kavcic said in a note to clients.

“Roughly 20 per cent of total Canadian goods trade runs through those ports, which presents the possibility of [a] short-term growth hiccup, as well as another (hopefully very temporary) supply-chain disruption. Major outbound shipments include grain, forest products and potash; large inbound volumes include consumer goods and autos,” Mr. Kavcic wrote.

Gold prices drifted lower on Wednesday as the dollar moved up ahead of the release of the minutes of the Federal Reserve’s latest monetary policy meeting.

Still, concerns about economic growth and weakness in stock markets supported the safe haven metal and limited its downside.

The dollar index climbed to 103.30, gaining about 0.25%.

Gold futures for August ended lower by $2.40 at $1,927.10 an ounce.

Silver futures for September ended up $0.290 at $23.402 an ounce, while Copper futures for September settled at $3.7685 per pound, down $0.0255 from the previous close.

Data showing China’s services activity expanded at the slowest pace in five months in June added to worries about a faltering post-pandemic recovery in the world’s second-largest economy.

Elsewhere, Eurozone Services PMI was finalized at a 5-month low and the U.K. services PMI showed renewed signs of fragility, suggesting that major economies will fall into recession later this year.

In U.S. economic news, the Commerce Department released a report showing new orders for U.S. manufactured goods increased by much less than expected in the month of May

The Commerce Department said factory orders rose by 0.3% in May after rising by a downwardly revised 0.3% in April. Economists had expected factory orders to climb by 0.8% compared to the 0.4% increase originally reported for the previous month.

Brian Kingston is president and chief executive officer of the Canadian Vehicle Manufacturers’ Association.

Recent economic indicators are starting to point in the wrong direction, with businesses anticipating slow growth ahead. According to the Bank of Canada’s latest Business Outlook Survey, sales growth will be weak over the next year, investment intentions have declined and concerns with inflation remain elevated.

One of the few bright spots in the survey is an improvement in supply chains allowing companies to work through backlogs, including in the auto industry. But now that bright spot is rapidly fading, with dire economic consequences.

Labour strife at Canada’s largest port threatens supply chain improvements and could send the economy into the ditch. On Canada Day, longshore workers at B.C. ports, including the Port of Vancouver, launched a strike – crippling a key component of the country’s transportation infrastructure network.

For the Canadian auto sector, which is responsible for an estimated 500,000 middle-class jobs, B.C. ports are particularly important. Vancouver is a key transit point for parts and finished vehicles produced and sold in Canada and North America. Last year, 333,734 vehicles were handled by the port, representing nearly a quarter of total Canadian vehicle sales. It also serves as a key transit point for materials needed to build electric vehicle (EV) batteries.

In addition, the port is a critical hub for wheat and canola, fertilizers, minerals, fuels and forest products. It is approximately the same size as Canada’s next five-largest ports combined, handling one-third of goods traded outside North America. Port activities sustain an estimated 115,300 jobs, $7-billion in wages and $11.9-billion in GDP across Canada.

The stoppage is forcing the automotive companies that depend on the port to reroute shipments, adding significant costs and increasing uncertainty at the worst possible time. For Canadians, this means higher vehicle prices and delays just as the sector was rebounding from pandemic-related inventory shortages.

And if the strike continues much longer, auto assemblers may face another wave of plant closures due to a lack of parts. This would be particularly detrimental as the auto sector is one of the key drivers of the Canadian economy. Motor vehicles and parts exports were up 16.2 per cent year over year in April and accounted for one-third of export growth.

Perhaps most concerning is the damage being done to Canada’s reputation on the world stage as a reliable jurisdiction for the production and movement of goods. This job action is on top of recent rail disruptions, bridge blockades and a strike at the Port of Montreal. According to a survey by Canadian Manufacturers & Exporters conducted last year, manufacturers have lost nearly $10.5-billion in sales because of disruptions in the supply chain, and are experiencing nearly $1-billion in increased costs.

Transportation and logistics companies that rearrange supply chains to limit exposure to an increasingly unreliable Canadian network may simply never return. For businesses in the automotive sector that depend on fast and efficient logistics, Canada’s competitiveness for job-creating investment is under question.

This is particularly problematic amid the auto industry’s once-in-a-century transformation to electrification. Canada has attracted more than $25-billion in new auto investment over the past three years, most of which is dedicated to assembling EVs and building a North American battery supply chain. Failing to address increasingly frequent transportation infrastructure disruptions is hurting our ambition to become an EV superpower.

The longer the strike at B.C. ports goes on, the more significant the damage will be to Canada’s fragile economy. Now is the time for the federal government to work with the parties and bring it to an immediate end. Delays are not affordable and not in the best interests of the country or our economy.