Daily Market Commentary

RSS

Get a complete view of the world as seen through the eyes of our investment professionals each and every business day shortly after the opening bell.

The information contained herein is intended for advisors for general information only and is compiled from sources believed to be reliable, but no representation or warranty, express or implied, is made as to its accuracy. All opinions contained in the commentary and expressed by the portfolio manager are subject to change without notice and are provided in good faith without legal responsibility. All market data is sourced from Bloomberg.​​​​​

  • U.S. CPI for February increased by 0.2% for the month...

    Tuesday, March 13, 2018 - 09:05 EDT
    U.S. CPI for February increased by 0.2% for the month, which matched expectations. This is a slight decline from last month’s increase of 0.5%, with year-over-year headline inflation tracking at 2.2% in February.  Inflation continues to creep steadily higher with increases broadly across all sectors.
  • The economic calendar is light to begin the March break week...

    Monday, March 12, 2018 - 08:49 EDT
    The economic calendar is light to begin the March break week, although both Asian and European equity markets continue to track higher as a result of strong jobs data reported in the U.S. on Friday.  Ten year U.S. Treasury yields have also moved higher during the month, currently at 2.89%, after reaching a low to start the month at 2.80%.  Mid-week, the U.S.
  • U.S. non-farm payrolls saw an increase of 313k in February

    Friday, March 9, 2018 - 09:39 EST
    U.S. non-farm payrolls saw an increase of 313k jobs in February, the highest job increase since mid-2016. The strong job growth was in-line with low initial jobless claims, strong ISM factory jobs growth, and strong ADP results. However, weaker than expected wage growth remained a downward risk. February’s average hourly earnings at 2.6% was under the 2.8% survey median, and 2.9% in January. The Canadian Labour Force Survey saw an increase of 15k jobs in February. Unlike the 137k drop in January, this increase was in-line with the longer term average gain of around 20k.
  • Yesterday the BoC left the overnight interest rate unchanged at 1.25%

    Thursday, March 8, 2018 - 09:12 EST
    The Bank of Canada released its monetary policy announcement yesterday that left the overnight interest rate unchanged at 1.25%.  The Bank will remain cautious as developments on trade are a growing source of uncertainty.  The BOC also flagged lower than typical wage growth as well as a recent deceleration in household credit growth.  Overall, higher interest rates should still prevail going forward although time is needed to fully assess the impact of the new housing measures including the economy’s sensitivity to higher rates.  The announcement by President Trump surro
  • The BoC will release its monetary policy statement this morning

    Wednesday, March 7, 2018 - 08:14 EST
    The Bank of Canada will release its monetary policy announcement this morning, although it is expected that the BOC will stay on hold with only an 11% probability that rates will rise by 25bps.  The recent news that the U.S. plans to impose new tariffs on imported steel and aluminum should give the BOC additional reason to hold the overnight rate.  In previous statements, Governor Poloz has highlighted the risks of NAFTA negotiations, and while they are still in the overhang, a potential trade war ignited by the U.S.
  • North American equity markets rallied yesterday...

    Tuesday, March 6, 2018 - 09:26 EST
    North American equity markets rallied yesterday, with both the S&P500 and TSX increasing by over 1%.  Despite the Trump Administration’s protectionist rhetoric to increase tariffs on imported steel, aluminum and European cars, equity markets in Europe continued to show strength this morning.  Most of the optimism followed House Speaker Ryan’s comments that he did not support the new tariffs and President Trump should consider the possibility of igniting a trade war.  Ryan fears that new tariffs could push inflation higher and slow growth, which would undo the positive ben
  • The tone this morning is cautious...

    Monday, March 5, 2018 - 08:44 EST
    The tone this morning is cautious following the announcement late last week from the Trump administration that they wished to impose a tariff on imported steel and aluminum.  The tariff levied is expected to be 25% on steel and 10% on aluminum.  The announcement could stall the seventh round of NAFTA negotiation, which concludes today, as neither Canada nor Mexico are expected to be exempt. Both Canada and Mexico are two of America’s largest sources for imported steel and aluminum.  To further the potential trade war between the U.S.
  • Equity markets are lower this morning following news that the U.S. plans to impose tariffs..

    Friday, March 2, 2018 - 09:00 EST
    Equity markets are lower this morning following news that the U.S. plans to impose tariffs on steel and aluminum imports.  Adding fuel to the fire, President Trump tweeted following the announcement that ‘trade wars are good’.  Although Canada is currently in the seventh round of NAFTA negotiations this week, it is unclear whether the new tariffs will apply to NAFTA countries.  Both Canada and Mexico are two of the largest exporters of steel to the U.S.
  • U.S. Core PCE deflator in Januray remained at 1.5% year over year

    Thursday, March 1, 2018 - 09:16 EST
    The U.S. Core PCE deflator in January remained at 1.5% year over year, although on a monthly basis the measure was up 0.3%.  The Fed continues to see underlying pricing pressures that should move the inflation measure higher over time, although since 2012 it continues to track below the 2% target.
  • Yesterday, the Liberals submitted their third federal budget

    Wednesday, February 28, 2018 - 09:00 EST
    Yesterday, the Liberals submitted their third federal budget, although there were very few changes from the update provided from last fall.  The projected deficit for the 2018-19 fiscal year will be -$18.1bil which is down from the current year of -$19.4bil.  The much anticipated Infrastructure Bank that was part of the Liberal election platform has again been pushed back, although this can been utilized as a fiscal policy tool in later years if economic growth slows.  Budget projections expect real GDP growth in the 1.5%-2.0% range with oil prices reaching $59/barrel in 2020
  • Two more Canadian banks reported this morning...

    Tuesday, February 27, 2018 - 09:31 EST
    Two more Canadian banks reported this morning that continued the trend of strong earnings to start the year.  Scotiabank reported resilient Q1/2018 ROE of +16.2% driven by positive operating leverage from cost saving initiatives along with loan growth in both the Canadian and International banking divisions.  As a result of the recent rate increase by the BOC, net interest margins increased by several basis points.  The Global Banking and Markets division saw net income increase by 16% over the quarter as lower volatility muted trading volumes previously.  Scotia’s CET1
  • The tone in both fixed income and equity markets thismorning is stable

    Monday, February 26, 2018 - 08:47 EST
    Canada will release its fiscal year 2018-19 budget preview tomorrow, that saw the last fall budget post a smaller than expected deficit for 2017-18.  Canada displayed stronger than expected growth last year as a result of a rebound in the energy sector.  Data out of Canada to start this year has been softer with employment declining due to higher minimum wages in Ontario as well as a weakening in home sales from the new OSFI B-20 mortgage rules.  On Friday, Canada will release its December GDP figures that are expected to increase marginally by 0.1%.
  • Canadian CPI for January declined to 1.7%

    Friday, February 23, 2018 - 09:58 EST
    Canadian CPI for January declined to 1.7%, from 1.9% in the previous month.  Although the headline number was higher than expectations of 1.5%, the data still points to lower price pressures.  Despite the higher minimum wage in Ontario pushing inflation higher in the services and restaurant sector, the rest of Canada saw more modest increases.  However, core CPI did move marginally higher as the common measure increased by 0.2%, to 1.8%. The average of the three core CPI measure is now hovering at the highest levels since September 2016.
  • Canadian retail sales for December declined by 0.8%

    Thursday, February 22, 2018 - 09:27 EST
    Canadian retail sales for December declined by 0.8%, which was below expectations for a flat reading.  With the introduction of Black Friday sales in Canada, a lot of the retail activity has been pulled forward to November, which was revised 0.1% higher to 0.3%.  For the month of December, volume terms were also negative falling by 0.8%, while sales excluding motor vehicles were down 1.8%.  On a year-over-year basis, retails sales in 2017 were the strongest since 1997, increasing by 6.7% annually
  • It remains a relatively quiet week...

    Wednesday, February 21, 2018 - 10:02 EST
    It remains a relatively quiet week following family long weekend in both the U.S and Canada, while the Chinese market remains closed until February 22nd  for the Lunar New Year holidays.  The market today is focusing on the FOMC’s January meeting minutes, which will be released this afternoon at 2:00 pm, in particular, it is watching out for any indications of further rate hikes beyond the three times that the market is expecting.
  • Equity and fixed income markets were mostly quiet and stable on Friday...

    Tuesday, February 20, 2018 - 10:15 EST
    Equity and fixed income markets were mostly quiet and stable on Friday, leading up to the long holiday weekend.  Government yields globally continue to march higher to their highest levels over the past two years.  Canada ten year yields currently stand at 2.32%, while ten year Treasuries slowly approach the 3% mark, currently at 2.90%.  The economic calendar is rather light to start the week, with Canada reporting retail sales and inflation data on Thursday and Friday.  Investors will look for signs of further rate hikes by the BOC from the CPI data after last month’s f
  • The BoC Deputy Governor spoke yesterday...

    Friday, February 16, 2018 - 09:49 EST
    Bank of Canada Deputy Governor Schembri spoke yesterday and discussed the current policy mandate that targets inflation with framework renewal in 2021.  The key takeaways noted that the current policy framework continues to work well where the central bank targets a two percent inflation target.  Although the target is well understood, the target is renewed every five years and may give an opportunity for the Bank of Canada to review the objective, given that inflation expectations may drift away from 2% over time.  The Bank of Canada will access the economic costs of high in
  • The U.S. Producer Price Index for January came in at expectations

    Thursday, February 15, 2018 - 09:30 EST
    The U.S. Producer Price Index for January came in at expectations of 0.4%, with the prior month revised higher by 0.1% to flat.  January wholesale prices increased as a result of higher energy costs, which could translate into higher inflation moving forward.  Headline CPI in the U.S. reported yesterday was 2.1% y/y.  Core PPI that excludes food and energy prices also rose by 0.4% for the month.  On a year over year basis, core PPI tracked 2.2% which is maintaining the highest levels over the past five years.
  • U.S. headline inflation moved higher in January

    Wednesday, February 14, 2018 - 09:25 EST
    U.S. headline inflation moved higher in January, up 0.5% m/m, which led to year over year inflation of 2.1%.  Both monthly and yearly headline inflation numbers came in above expectations of 0.3% and 1.9%, respectively.  Energy prices in January pushed CPI higher along with apparel and transportation costs.  Core CPI year over year remained flat at 1.8%.  The stronger inflation numbers in January is reinforcing conviction that the Fed will raise interest rates in March.  U.S.
  • Equity markets rebounded yesterday

    Tuesday, February 13, 2018 - 08:58 EST
    Equity markets rebounded yesterday and calm returned to both fixed income and stocks following a volatile last week.  There were several central bank speakers this morning with ECB President Draghi indicating that Euro area employment is higher than ever as the economy continues to improve.  Despite EU growth expected to come in at 2.4% for 2017, Draghi noted that strong employment and economic data does conceal some underlying risks – more specifically, the quality of the jobs needs to be improved.  In the U.S.
  • The tone in equity markets this morning is positive

    Monday, February 12, 2018 - 09:42 EST
    The tone in equity markets this morning is positive compared with the large volatility witnessed last week.  Most European equity markets are up over 1% while North American equity futures are pointing towards a higher open as well.  Most of the sell-off last week was related to global worries of higher interest rates as 10-year U.S. Treasury yields ended the week flat at 2.85%.  However, yields in Canada and the U.S. are tracking a couple basis points higher as a result of the positive tone.
  • Canadian employment saw a decline of 88k jobs in January

    Friday, February 9, 2018 - 09:01 EST
    Canadian employment finally gave jobs back after a strong run of 17 straight months of positive additions.  Canadian employment saw a decline of 88k jobs in January that fell well below expectations of +10k.  Within the details, part time employment contributed to all the jobs losses, declining -137k, while full-time added +49k.  The participation rate declined by 0.3% to 65.5% which alleviated pressures on the unemployment rate increasing from 5.7% to 5.9%.  Average hourly wages in January increased positively by 3.3% driven by increases in minimum wage in Ontario.&nbsp
  • Several Fed speakers have stated that 3 rate hikes would be appropriate in 2018

    Thursday, February 8, 2018 - 09:02 EST
    There were several Fed speakers, starting with Kaplan, who noted that three rate hikes would be appropriate in 2018.  On the curve, he said that the Fed does not wish to be in a situation where they would invert the yield curve, although he believes that the U.S.
  • Volatility in global equity market remains

    Wednesday, February 7, 2018 - 08:35 EST
    Volatility in global equity markets remains even as North American equity indices rebounded to end the day higher.  The S&P500 was up 1.74% while the TSX increased by 0.19%.  European equities are positive to start today although U.S.
  • Clone of Global equity markets continue to be under pressure

    Tuesday, February 6, 2018 - 08:37 EST
    The global sell-off in risks assets continues this morning after the TSX was down 1.74% and the S&P500 was lower by over 4% yesterday.  Overnight, Asian equity markets saw more downward pressure and most European equity indices are down over 2%.  The last couple trading days have seen significant volatility with the VIX index sitting at 49 this morning – levels not seen since 2015.  The concerns remained around rising bond yields globally as a result of higher inflation that could diminish stock valuations.  Government of Canada and U.S.
  • Global equity markets continue to be under pressure

    Monday, February 5, 2018 - 09:02 EST
    Global equity markets continue to be under pressure this morning following one of the largest sell-offs in the Dow Industrial Average since 2009.  In addition, the TSX was down 1.61% while the S&P500 fell over 2% on Friday.  This morning, European equity markets are lower by over 1%, while futures are pointing to a negative open for North American equity markets also.
  • U.S. non-farm payrolls for January saw an increase of 200k

    Friday, February 2, 2018 - 08:59 EST
    U.S. non-farm payrolls for January saw an increase of 200k, which was above expectations of +180k.  The unemployment rate remained unchanged at this cycle’s low of 4.1%.  The increase in average hourly earnings added to the positive momentum in the jobs report, which saw a year over year increase of 2.9% that moved higher from the 2.7% reading last month.  Wages increased in January at the strongest pace since June 2009.  The solid tone of today’s release reinforces the Fed’s intention to increase rates by 25bps at the March meeting.  In addition, the U.S.
  • The Federal Reserve released its monetary policy decision yesterday

    Thursday, February 1, 2018 - 09:09 EST
    The Federal Reserve released its monetary policy decision yesterday afternoon and decided to leave the Fed Funds Rate unchanged.  The FOMC statement reiterated that the U.S.
  • The FOMC will hold its rate decision later this afternoon

    Wednesday, January 31, 2018 - 08:34 EST
    The FOMC will hold its rate decision later this afternoon.  This meeting will be the final one for Yellen, who will pass the baton to Jerome Powell.  As a result, the Fed is not expected to make any drastic changes to the Fed Funds Rate as current implied probabilities only indicate a 3.8% chance that rates could be increased by 25bps.  Within the statement, investors will continue to look for clues on how the FOMC views inflation expectations, where core PCE released earlier this week is still below the 2% target.  Otherwise, President Trump held his first State of the
  • NAFTA representatives commented that good progress had been made...

    Tuesday, January 30, 2018 - 09:07 EST
    After wrapping up the sixth round of NAFTA negotiations yesterday, representatives from the three countries commented that good progress had been made although at a very slow pace.  Canadian Foreign Minister Freeland did remark that there were still some gaps to resolve and is expected to speak later today.  The U.S. Trade Representative Lighthizer shed some light on the current proposal to have 85% of new vehicles made in North America and 50% originating from the U.S.
  • U.S. core PCE held flat over the year at 1.5%

    Monday, January 29, 2018 - 08:59 EST
    The U.S.
  • Canadian CPI for December saw a decline of 0.4%

    Friday, January 26, 2018 - 08:53 EST
    Canadian CPI for December saw a decline of 0.4% with year over year headline inflation at 1.9%.  This was down slightly from the previous month’s figure of 2.1%.  December is typically a weaker month for inflation data, as the Bank of Canada expects CPI to hover around the 2% range over the next two years.  Also positive in the details was core inflation that saw all three measures move higher by about 0.1%.  The first look at annualized fourth quarter GDP in the U.S.
  • BoC Governor Poloz spoke this morning

    Thursday, January 25, 2018 - 09:04 EST
    Bank of Canada Governor Poloz spoke this morning on CNBC and commented on the recent decision to increase the overnight rate by 25bps.  At this current juncture, the BOC is totally data dependent, so the recent string of strong economic data reinforces the central bank’s decision to raise rates.  However, Poloz reiterated that it is important not to be mechanical about rates or to use strict rules.  Ultimately, some of his biggest concerns include NAFTA, household debt and cyber security risk.  The BOC is certain that the economy will be more sensitive to rate hikes with
  • The sixth round of NAFTA negotiations continue today

    Wednesday, January 24, 2018 - 08:53 EST
    The sixth round of NAFTA negotiations continue today, although there have been few headlines emerging from the talks.  Despite this, many of the world leaders have gathered in Davos this week with 11 members announcing an agreement to save the Trans-Pacific Partnership pact.  Previously, President Trump publicly noted his displeasure for TPP and that the U.S. will not participate in the trade deal expected to be signed in early March.  Prime Minister Trudeau indicated that Canada will partake in TPP.  In the U.S.
  • Canada is estimated to have the second strongest growth among G7 peers

    Tuesday, January 23, 2018 - 08:43 EST
    Yesterday, the IMF upgraded global growth expectations to 3.9% in 2018 and 2019 as a result of the U.S. tax cuts and Euro area growth.  Canada is estimated to have the second strongest growth among G7 peers at 2.3% this year. The U.S.
  • Markets have not reacted to the government shutdown

    Monday, January 22, 2018 - 08:21 EST
    The U.S.
  • The U.S. government is again at risk of a shutdown

    Friday, January 19, 2018 - 09:00 EST
    The U.S. government is again at risk of a shutdown at midnight today, although the U.S. Congress was able to pass a bill yesterday night that would extend short-term funding until February 12.  However, the bill now moves to the Senate where Democrats may not support the vote.  There is still divide between the two parties related to the defense budget and legislation around undocumented immigrants.  Ultimately, to avoid a shutdown, some sort of short-term measure needs to be negotiated while the Democrats and Republicans hash out their differences.
  • The BOC raised rates by 25bps yesterday

    Thursday, January 18, 2018 - 09:15 EST
    The Bank of Canada raised rates by 25bps yesterday pushing the Overnight Rate up to 1.25%.  Within the statement, the BOC highlighted the cloudy economic outlook surrounding the future of NAFTA despite the recent string of strong data releases.  The Canadian economy is expected to grow at a 2.2% pace in 2018 and 1.6% in 2019.  GDP will be driven less by consumption and residential investment, given higher interest rates and new mortgage rules, although business investment should contribute more.  Ultimately, the economic outlook is expected to warrant higher interest rat
  • 89% chance that the BOC will raise rates by 25bps today

    Wednesday, January 17, 2018 - 09:24 EST
    The Bank of Canada will release its monetary policy statement this morning with implied probabilities currently pricing in a 89% chance that the Bank will raise rates by 25bps.  Recent economic data indicates that the Canadian economy, as well as the job market, is robust, however overhang from NAFTA uncertainties could still give reason for the BOC to remain on pause.  This afternoon, the Fed will release its Beige Book that will encompass the recent holiday season.  Personal consumption and retail sales were strong during that period driven by Black Friday and the holiday s
  • U.S. bank earnings continue to be released

    Tuesday, January 16, 2018 - 08:36 EST
    The economic calendar is light following the U.S. holiday yesterday with no major data being released out of Canada or the U.S.  U.S.
  • Markets will be quieter today, with the Martin Luther King Jr. holiday

    Monday, January 15, 2018 - 09:31 EST
    Markets will be quieter today, with the Martin Luther King Jr.
  • U.S. headline CPI for December declined by 0.1% to 2.1% year over year

    Friday, January 12, 2018 - 09:48 EST
    U.S. headline CPI for December declined by 0.1% to 2.1% year over year.  However, core inflation ticked higher by 0.1%, to 1.8%.  The increase in core inflation reinforces the Fed expectation to increase rates this year.  Within the details, energy prices fell in the month, while food inflation moved marginally higher.  U.S.
  • Two year Government of Canada yields opened yesterday at their highest levels in almost a decade

    Thursday, January 11, 2018 - 08:52 EST
    Two year Government of Canada yields opened yesterday at their highest levels in almost a decade, based on expectations that the Bank of Canada would raise interest rates by 25bps next week.  However, late in the trading day, news reports were released that an anonymous Canadian official believed President Trump would pull out of NAFTA by the end of January.  The rumour led to the Canadian dollar selling off by approximately 0.75% against the U.S.
  • The economic calendar continues to be light

    Wednesday, January 10, 2018 - 09:16 EST
    The economic calendar continues to be light today, although Minneapolis Fed Chair Kashkari spoke yesterday.  He commented that low-inflation around the world, not only in the U.S., continues to be a risk, and the signals are worth watching.  In his eyes, the economic recovery has been slow, although forward looking equity markets are showing optimism on global economic growth.  Otherwise, several of the Canadian banks have commented on the effect of the lower U.S.
  • Canada released its Business Outlook Survey yesterday

    Tuesday, January 9, 2018 - 09:22 EST
    Canada released its Business Outlook Survey yesterday, where investors looked for further clues that would point to the Bank of Canada raising interest rates next week.  Businesses indicated that rising inflationary and capacity pressures are on the horizon, which would justify a potential rate increase.  Even though the recent monetary policy statement addressed the uncertainty surrounding NAFTA negotiations, Canadian businesses are reflecting a smaller degree of concern and expect to extend hiring and business investment.  Inflation expectations that CPI will be in the rang
  • The strong employment numbers on Friday saw Canada add 78k jobs in December

    Monday, January 8, 2018 - 09:45 EST
    The strong employment numbers on Friday saw Canada add 78k jobs in December.  Back to back months of strong employment, leading to the unemployment rate at 5.7%, has moved expectations higher that the Bank of Canada will increase the Overnight Rate by 25bps on January 17.  Current implied probabilities stand at 84%, with 2-year and 10-year Canada yields moving 5bps and 7bps higher, respectively, after the employment data release.  There is limited economic data being released out of Canada this week that could change the rate hike expectations.  In the U.S., the economic
  • Job growth in Canada posted back to back months of strong data

    Friday, January 5, 2018 - 09:29 EST
    Job growth in Canada posted back to back months of strong data heading into year end.  December added 78.6k jobs, which was well above expectations of 2k.  Full-time employment accounted for 23.7k of the new jobs, while part-time contributed 54.9k.  The large number this month pushed the unemployment rate down to this cycle’s low, from 6.0% to 5.7%, even as the participation rate ticked up 0.1% to 65.8%.  By region, Quebec and Alberta were the strongest, each adding approximately 26k.  U.S.
  • The Fed released its minutes from the December meeting

    Thursday, January 4, 2018 - 09:22 EST
    The Fed released its minutes from the December meeting, reiterating that it is on a gradual path towards removing monetary stimulus.  The FOMC decided to increase the Fed Funds Rate by 25bps at the past meeting, despite some participants voicing concerns as a result of persistently weak inflation, leading to declines in longer term inflation expectations.  Despite this, members generally agreed that the continued flattening of the yield curve was not unusual at this point in the cycle, although observing a future inversion of the curve could adversely affect financial conditions.&
  • Fixed income and equity markets were relatively calm after the holiday season

    Wednesday, January 3, 2018 - 09:35 EST
    Fixed income and equity markets were relatively calm after the holiday season, as Canadian and U.S. equity markets moved higher to start the year.  WTI crude prices continue to track above $60/barrel, while the government of Canada 10-30yr spread remains near this cycle’s low, at 23bps.  The economic calendar is light to start the year, with most investors focused on jobs data out of Canada and the U.S. on Friday.  However, the FOMC will release its minutes today from the December meeting that saw the Fed raise rates by 25bps.  As labour markets in the U.S.
  • The New Year begins with focus on the recently passed U.S. tax reform bill

    Tuesday, January 2, 2018 - 11:18 EST
    The New Year begins with focus on the recently passed U.S. tax reform bill, which will see corporate taxes reduced from 35% to 21%.  This is expected to be positive for corporate profits in 2018, as well as a driver for GDP growth this year.  The shortened week will see a lighter economic calendar that will be focused around the U.S. non-farm payrolls for December, to be released on Friday.  The expectation is for jobs to increase by 188k for the month.  Strong labour markets have been fueling consumption, with MasterCard reporting that U.S.

Pages