Morning Minutes

Quiet Markets Await New Catalysts As Focus Shifts To Canada




Yesterday’s selloff in North America continued through Asia Pacific trading overnight where the Nikkei lost 1.7% and the Hang Seng fell 1.3%. Index action has stabilized in Europe where the Dax is up 0.5% and the FTSE is down 0.1%. US index futures are essentially flat so far this morning with investors still reeling from yesterday’s 2.2% drop in the NASDAQ.  

Interest rates and the potential that the Fed could accelerate monetary tightening at its next meeting to fight inflation remains the talk of the town around Wall Street this morning, along with inverted yield curves, which historically have commonly acted as a leading indicator of a recession. The US 10-year treasury note yield is consolidating recent gains near 2.60% this morning.

Energy markets are trying to bounce back this morning with WTI Crude, Brent Crude, Gasoline and Natural Gas all up between 1.50% and 2.00%. Despite these gains, however, WTI remains below $100.00/bbl. Metals action is mixed today with Copper down 0.5% and Gold up 0.5%.

US jobless claims came in much better than expected (166K vs street 200K) and last week’s claims were revised down to 171K from 202K indicating a strong US economy. Corporate news has also beenencouraging this morning with clothier Levi Strauss trading up 3.0% in premarket action after beating expectations on earnings ($0.46 vs street $0.42). The next notable US economic reports are consumer and producer price inflation numbers in the middle of next week.    

Canada dominates the economic calendar for the rest of this week. Today the federal budget is coming out with investors looking for signs of how new spending programs and potentially new taxes to pay for them could impact different sectors or the financial markets. Yesterday’s federal government approval of the $12B Baie du Nord offshore oil project could be seen as a positive for the oil patch. Tomorrow Canadian employment growth (street 80K) and wage inflation numbers are due (previous 3.3%) heading into next week’s Bank of Canada meeting.

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Colin Cieszynski, Chief Market Strategist

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

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