First Look With Surveillance: SNB Surprise, BOE Set
It’s shaping up to be an ugly start to the day on the markets, with U.S. futures pointing to a sharply lower open after yesterday’s post-Fed gains. Investors are mulling the pace and scale of the U.S. Federal Reserve’s monetary tightening plan, a day after Jay Powell & Co. pulled the trigger on the first 75 basis point increase since 1994. Investors initially bought the news, sending stocks higher in the waning hours of Wednesday’s trade after Powell indicated super-sized hikes are far from the norm, but that optimism is clearly fading as recession fears bubble to the surface.
BUT WHAT ABOUT CANADA?
Speaking of central banks, there’s a growing chorus of calls for the Bank of Canada to follow the Fed’s lead with a 75 basis point hike of its own at the July meeting. Economists from CIBC, Scotiabank and BMO all revised their calls for the July meeting to three-quarters of a per cent from the earlier half per cent views (for what it’s worth – RBC tells us they’re waiting on next week’s inflation data before revising their call, though noted Powell opened the door for the BoC to follow suit.) Tiff Macklem hasn’t been shy in indicating more supersized hikes could be on the table, declining to push back last week when asked if households could handle a hike larger than half a per cent. We’re looking forward to getting some further perspective on all this from former Bank of Canada governor David Dodge at about 9:45 a.m. ET.
OTTAWA’S PLAN TO TACKLE INFLATION
Deputy Prime Minister and Finance Minister Chrystia Freeland is taking to the stage at the Empire Club here in Toronto later today to outline the federal government’s plan to help tackle sky-high inflation. Our Bloomberg partners are reporting that while Freeland will highlight steps the feds are taking to counter inflation running at levels not seen since the early 1990s, she will not lay out any new spending, opting to highlight government programs that are already within Ottawa’s fiscal framework.
OTHER NOTABLE STORIES
- Telus is back on the acquisition trail, announcing plans to buy up LifeWorks – perhaps better known by its former name, Morneau Shepell – for $2.3 billion plus the assumption of $600 million in debt. The deal works out to $33 per share, an 81 per cent premium to yesterday’s closing price.
- WealthSimple is tightening its belt, announcing its cutting 13 per cent of its workforce, eliminating 159 jobs. The fintech upstart says the cuts are a result of changing market conditions, in particular as we exit the worst of the pandemic.
- CN Rail has received strike notice from the union representing about 750 signals and communications workers.
- The Bank of England has hiked its benchmark rate for the fifth time in a row, this time to 1.25 per cent, in a bid to quell inflation. Of note, the move wasn’t unanimous – while six members carried the vote for a quarter per cent hike, there were three dissenters who voted in favour of a more aggressive half per cent.
- Shares of Twitter are gaining in the premarket – at last check, up about two per cent – after the Wall Street Journal reported Elon Musk will reiterate his desire to own the social media platform at an all-hands meeting later today.
- Revlon is filing for Chapter 11 bankruptcy, as the cosmetics giant says its unable to handle its massive debt load.
- Notable data: Wholesale Trade, US Initial Jobless Claims, US Housing Starts & Building Permits, Philadelphia Fed Index
- Notable earnings: Kroger Co., Adobe
- Chrystia Freeland delivers speech at Empire Club of Canada (1200)