Morning Minutes

Interest Rate Hikes and Strong Bank Earnings In Focus




For the last several months, the Reserve Bank of New Zealand has been the lead domino among central banks in tightening moves, first starting to raise rates by 0.25% a meeting starting last fall and then accelerating to a 0.50% increase earlier this spring. Last night, in what could be a sign of the times, the RBNZ raised its benchmark rate by 0.50% for the second meeting in a row, indicating that high inflation is keeping the pressure on central banks to tighten monetary policy more aggressively.

Another sign of the mood at central banks may come today with Fed Vice Chair Brainard speaking at 12:15 pm EDT. Historically, Brainard has been seen by the street as a lead voice from the dovish camp at the Fed, with St. Louis Fed President Bullard usually seen as representing the hawkish camp, and Chair Powell as representing the general consensus somewhere in the middle. As such, Brainard’s comments how much heat from inflation the doves at the Fed are feeling.

Meanwhile, Canadian bank earnings week has kicked off with two stellar results from the Bank of Montreal ($3.23 vs street $3.22, 4.5% dividend increase) and Bank of Nova Scotia ($2.18 vs street $1.97, 3.0% dividend increase) who beat expectations and raised their dividends. Growth in banking with the Canadian economy reopening from lockdowns, plus international banking helped to boost results and offset soft quarters from their capital markets operations as stock and bond markets struggled.

US index futures are in the red this morning down 0.4% to 0.6% after the Dow finished flat and the NASDAQ fell 2.3% yesterday. European action finds the Dax flat and the FTSE up 0.2%. Despite the 10-year treasury note yield slipping back toward 2.75%, the US Dollar is rallying which suggests capital continues to seek out defensive havens in US bonds. The greenback is up 0.7% against the Euro, 0.4% against the Canadian Dollar and 0.6% against Gold. Commodity action is mixed again with copper down 1.75% and WTI crude oil up 1.25%.

New Video: SIA Wealth May Webinar Replay With Jeremy Fehr

A replay of SIA Wealth CEO, Jeremy Fehr’s recent presentation on the ongoing R&D advancements implemented into SIA Wealth’s Mutual Fund and ETF mandates over the past two years, which have helped SIA Wealth successfully manage the current volatile market environment, is now available.

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Colin Cieszynski, Chief Market Strategist

Colin Cieszynski, CFA, CMT
Chief Market Strategist
+1 (647) 282-4428

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