Category: Uncategorized

Monday June 10

China aggregate yuan financing and new yuan loans

Japan real GDP and banking lending

Italy industrial production

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Tuesday June 11

Japan machine tool orders

(8:30 a.m. ET) Canadian building permits for April. Estimate is a month-over-month increase of 5.0 per cent.

(10 a.m. ET) U.S. quarterly services survey for Q1.

Also: U.S. Fed meeting begins

Earnings include: Major Drilling International Inc.

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Wednesday June 12

China CPI and PPI

Germany CPI

(8:30 a.m. ET) U.S. CPI for May. The Street is expecting a month-over-month increase of 0.1 per cent and a year-over-year gain of 3.4 per cent.

(2 p.m. ET) U.S. Fed announcement and summary of economic projections with chair Jerome Powell’s press briefing to follow.

(3:15 p.m. ET) Bank of Canada governor Tiff Macklem joins a panel at the Conference of Montreal.

Earnings include: Broadcom Inc.; Dollarama Inc.; Wall Financial Corp.

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Thursday June 13

Bank of Japan meeting and monetary policy announcement (through Friday)

Euro zone industrial production

(8:30 a.m. ET) Canada’s national balance sheet and financial flow accounts for Q1.

(8:30 a.m. ET) U.S. initial jobless claims for week of June 8. Estimate is 225,000, down 4,000 from the previous week.

(8:30 a.m. ET) U.S. PPI final demand for May. Consensus is a rise of 0.2 per cent from April and up 2.7 per cent year-over-year.

(9:35 a.m. ET) Bank of Canada deputy governor Sharon Kozicki speaks at the Canadian Association for Business Economics.

Earnings include: Adobe Systems Inc.; Kroger Co.

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Friday June 14

Japan industrial production

Euro zone trade surplus

(8:30 a.m. ET) Canadian manufacturing sales and new orders for April. Estimates are month-over-month increases of 1.2 per cent and 2.0 per cent, respectively.

(8:30 a.m. ET) Canadian wholesale trade for April. Estimate is a gain of 2.8 per cent from March.

(8:30 a.m. ET) Canada’s new motor vehicle sales for April. Estimate is a year-over-year rise of 15.0 per cent.

(8:30 a.m. ET) U.S. import prices for May. The Street expects an increase of 0.1 per cent from April and 1.6 per cent year-over-year.

(10 a.m. ET) U.S. University of Michigan consumer sentiment for June.

U.S. job growth accelerated far more than expected in May, keeping the Federal Reserve on track to hold off starting to cut interest rates until September at the earliest.

The Labor Department’s closely watched employment report on Friday also showed the unemployment rate ticked up to 4.0 per cent from 3.9 per cent in April, breaking a symbolic threshold below which the jobless rate had previously held for 27 straight months.

While the labour market has softened in recent months, its still-solid clip has allowed the Fed to take its time so far in deciding when to begin lowering borrowing costs.

Nonfarm payrolls increased by 272,000 jobs last month, the Labor Department’s Bureau of Labor Statistics said. Revisions showed 15,000 fewer jobs created in March and April combined than previously reported. Economists polled by Reuters had forecast payrolls advancing by 185,000. Estimates ranged from 120,000 to 258,000.

The U.S. central bank is expected to leave its benchmark overnight interest rate unchanged next week in the current 5.25 per cent-5.50 per cent range, where it has been since last July.

There are some other signs though that the job market is beginning to loosen more steadily. The U.S. central bank is closely monitoring labour market conditions and economic growth to ensure it doesn’t keep rates too high for too long and overcool the economy as it tries to return inflation back to its 2 per cent target.

Overall economic output in the first quarter grew at the slowest rate in nearly two years and data so far in the current quarter on balance has been weaker than expected.

Data earlier this week showed job openings declined in April and the number of available jobs per job-seeker reached its lowest level since June 2021.

Citing continued evidence that underlying inflation is easing, the Bank of Canada on Wednesday announced it has decided to lower interest rates by 25 basis points.

The Bank of Canada reduced its target for the overnight rate to 4.75 percent, with the bank rate at 5.0 percent and the deposit rate at 4.75 percent.

The widely expected decision comes as recent data has increased the Canadian central bank’s confidence that inflation will continue to move towards its 2 percent target.

The bank’s accompanying statement noted its preferred measures of core inflation has slowed, while three-month measures suggest continued downward momentum.

Nonetheless, the Bank of Canada noted risks to the inflation outlook remain and said its Governing Council is closely watching the evolution of core inflation.

The Governing Council remains particularly focused on the balance between demand and supply in the economy, inflation expectations, wage growth, and corporate pricing behavior, the bank said.

The Bank of Canada’s next scheduled date for announcing the overnight rate target is July 24, when the bank will also publish its next full outlook for the economy and inflation.

U.S. private payrolls increased less than expected in May while data for the prior month was revised lower, a report showed on Wednesday.

Private payrolls increased by 152,000 jobs last month after rising by a downwardly revised 188,000 in April, the ADP Employment report showed. Economists polled by Reuters had forecast private employment increasing by 175,000 last month.

The report was the latest indication that employment is not buckling under the weight of 525 basis points of interest rate increases from the Federal Reserve since March 2022, although other data has shown the job market is coming into better balance.

On Tuesday, the Labor Department reported job openings fell in April to the fewest in more than three years and the ratio of vacancies to the number of unemployed persons had returned to levels seen prior to the COVID-19 pandemic outbreak in early 2020.

The ADP report, jointly developed with the Stanford Digital Economy Lab, also precedes Friday’s more comprehensive and closely watched nonfarm payrolls report for May from the Bureau of Labor Statistics.

Economists polled by Reuters expect the BLS data to show 170,000 private-sector jobs were created last month, little changed from April’s 167,000, while total payroll growth is estimated at 185,000 versus 175,000 in April. The unemployment rate is forecast unchanged at 3.9 per cent and annual wage increases holding steady at 3.9 per cent.

The Canadian market tumbled Tuesday morning on heavy selling in materials and energy stocks, and despite regaining some lost ground subsequently, ended the day’s session notably lower.

Investors looked ahead to the Bank of Canada’s interest rate decision, due on Wednesday. The European Central Bank’s policy announcement, due on Thursday, and the U.S. jobs data, are also eyed for directional clues.

The benchmark S&P/TSX Composite Index ended with a loss of 138.51 points or 0.63% at 21,978.18, about 150 points off the day’s low of 21,828.40.

Materials and energy stocks were the major losers. The Materials Capped Index lost nearly 4%, while the Energy Capped Index dropped 2.06%. Shares from the rest of the sectors ended mixed.

Ssr Mining Inc (SSRM.TO), down 8.8%, was the biggest loser in the Materials index. Ero Copper (ERO.TO), Pan American Silver Corp (PAAS.TO), Ivanhoe Mines (IVN.TO), First Quantum Minerals (FM.TO), First Majestic Silver Corp (AG.TO), Seabridge Inc (SEA.TO), Teck Resources (TECK.B.TO), Filo Mining (FIL.TO), Silvercrest Metals (SIL.TO) and Hudbay Minerals (HBM.TO) lost 5 to 7%.

Energy stocks Veren Inc (VRN.TO), Precision Drilling Corp (PD.TO), Birchcliff Energy (BIR.TO), Enerplus Corp (ERF.TO), Vermilion Energy (VET.TO), Baytex Energy (BTE.TO), International Petroleum Corp (IPCO.TO) and Whitecap Resources (WCP.TO) ended down 2.7 to 4%.

Celestica Inc (CLS.TO), BRP Inc (DOO.TO), EQB Inc (EQB.TO) and West Fraser Timber (WFG.TO) were among the other major losers in the session.

Park Lawn Corporation (PLC.TO) zoomed nearly 60%. The company announced on Monday that it has entered into an arrangement agreement with Viridian Acquisition Inc., an affiliate of Homesteaders Life Company and Birch Hill Equity Partners Management Inc., pursuant to which Viridian and Birch Hill will acquire all of the issued and outstanding common shares of Park Lawn for a price of $26.50 per share in an all-cash transaction valued at approximately $1.2 billion.

GFL Environmental (GFL.TO) rallied 6.9%. Russel Metals (RUS.TO) climbed 4.7%. Stella-Jones (SJ.TO), Canadian Tire Corporation (CTC.TO), Metro Inc (MRU.TO), TFI International (TFII.TO), Waste Connections (WCN.TO), RB Global Inc (RBA.TO), Shopify Inc (SHOP.TO) and Stantec Inc (STN.TO) gained 1.9 to 3.2%.

• U.S. crude oil has erased most gains for the year and is now up just under 2% in 2024.
• In a surprise move, eight OPEC+ producers laid out a plan to phase out 2.2 million bpd in production cuts starting in October.
• The OPEC+ decision has let the “bearish genie out of the bottle,” analyst Tamas Varga said.

Crude oil prices today: WTI below $73 as OPEC+ to increase supply (cnbc.com)

• The influential Organization of the Petroleum Exporting Countries and its allies, collectively known as OPEC+, on Sunday agreed to extend their official crude output cuts into 2025, also stretching two other sets of supply curbs over different periods.
• In a Google-translated statement carried by the state-owned Saudi Press Agency, a subset of the OPEC+ alliance, including kingpins Saudi Arabia and Russia, said they would extend a set of nearly 1.7 million barrels per day of voluntary cuts that were set to expire at the end of this year.
• This smaller group of OPEC+ member will also stretch another round of voluntary output cuts totalling 2.2 million barrels per day until the end of the third quarter of this year.

Oil alliance OPEC+ extends collective crude production cuts into 2025 (cnbc.com)

Canada’s economy grew at a slower pace in the first quarter of the year than economists and the Bank of Canada expected, increasing the possibility that the central bank will cut its benchmark interest rate next week. 

Statistics Canada said real gross domestic product (GDP) grew 1.7 per cent at an annualized rate in the first quarter of the year, weaker than the 2.2 per cent that economists expected and short of the Bank of Canada’s forecast of 2.8 per cent. In the first quarter the economy grew 0.4 per cent. Fourth-quarter GDP growth was also revised down, from an annualized rate of 1 per cent to 0.1 per cent. 

Canada’s economy showed no growth in March, following a 0.2 per cent increase in February. Advanced estimates show GDP grew 0.3 per cent in April, due to increases in manufacturing, mining, and quarrying. 

The data comes days before the Bank of Canada is set to make an interest rate announcement that could see the central bank cut rates for the first time since early in the COVID-19 pandemic.

“While the downside surprise in Q1 was driven by a big cut in business inventories, the reality is that underlying growth remains well short of potential, and slack is building for the overall economy,” BMO chief economist Douglas Porter wrote in a research note on Friday reacting to the data. 

“For the Bank of Canada, we believe the main message is that the output gap is widening, as reinforced by a less-tight job market, modestly increasing the chances of a rate cut next week. There are respectable arguments on both sides of the decision, but we believe the balance of evidence points to a cut.”

Money markets increased bets for a rate cut in June, from 66 per cent before the data was released to almost 80 per cent, according to Reuters.

“Given the weaker trend in GDP, and the cooling in inflation, the Bank of Canada remains on track to deliver the first interest rate cut at next week’s meeting,” CIBC economist Katherine Judge wrote in a research note. 

“The Q1 figure was well below the Bank of Canada’s last published MPR forecast (2.8 per cent), and activity looks even more sluggish when accounting for population growth, as the surge in domestic demand looks to be a one-off in the broader trend of weak readings seen last year.” 

While the report missed expectations, Desjardins’ senior director of Canadian economics Randall Bartlett noted “the details of the release were more positive than the headline suggests.” 

Household spending increased 0.7 per cent in the first quarter due to a rise in services spending. The household savings rate also hit seven per cent in the quarter, the highest rate since Q1 of 2022. Business investment rose 0.8 per cent, driven by more spending on engineering structures largely within the oil and gas industry. At the same time, Statistics Canada noted widespread slowdown in business investment in inventories, with the retail auto industry posting the largest deceleration. 

“While headline real GDP growth looks as though it will be respectable in the first half of this year, it will be notably below the pace recently forecasted by the Bank of Canada,” Bartlett wrote. 

Monday June 3

China PMI

Japan manufacturing PMI and capital spending

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

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

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

(10 a.m. ET) U.S. construction spending for April. The Street is projecting an increase of 0.2 per cent from March.

Also: Canadian and U.S. auto sales

Earnings include: Coveo Solutions Inc.

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Tuesday June 4

Germany unemployment

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

(10 a.m. ET) U.S. factory orders for April. Consensus is a rise of 0.6 per cent from March.

Earnings include: CrowdStrike Holdings Inc.; Ferguson PLC; Hewlett Packard Enterprise Co.

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Wednesday June 5

Japan and Euro zone services and composite PMI

(8:15 a.m. ET) U.S. ADP National Employment Report for May.

(8:30 a.m. ET) Canada’s labour productivity for Q1.

(9:30 a.m. ET) Canada’s global services PMI for May.

(9:45 a.m. ET) Bank of Canada policy announcement with press conference to follow.

(9:45 a.m. ET) U.S. S&P Global Services/Composite PMI for May.

(10 a.m. ET) U.S. ISM Services PMI for May.

Earnings include: Dollar Tree Inc.; Lululemon Athletica Inc.; North West Co. Inc.; Transcontinental Inc.

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Thursday June 6

China trade surplus

Euro zone retail sales

Germany factory orders

ECB monetary policy meeting

(8:30 a.m. ET) Canada’s merchandise trade balance for April.

(8:30 a.m. ET) U.S. initial jobless claims for week of June 1. Estimate is 222,000, up 3,000 from the previous week.

(8:30 a.m. ET) U.S. productivity and unit labor costs for Q1. Consensus estimates are annualized rate rises of 0.3 per cent and 4.8 per cent, respectively.

(8:30 a.m. ET) U.S. goods and services trade deficit (and revisions) for April.

Earnings include: Enghouse Systems Ltd.; JM Smucker Co.; Saputo Inc.

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Friday June 7

Japan household spending

Euro zone real GDP

Germany trade surplus and industrial production

(8:30 a.m. ET) Canadian employment for May. The Street expects a rise of 0.1 per cent, or 25,000 jobs, from April with the unemployment rate rising 0.1 per cent to 6.1 per cent and average hourly wages rising 4.8 per cent year-over-year.

(8:30 a.m. ET) U.S. nonfarm payrolls for May. Consensus is a rise of 180,000 jobs month-over-month with the unemployment rate remaining at 3.9 per cent and average hourly wages increasing 0.3 per cent from April and 3.9 per cent year-over-year.

(10 a.m. ET) U.S. wholesale inventories for April. Estimate is a month-over-month increase of 0.1 per cent.

(12 p.m. ET) U.S. flow of funds for Q1.

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