U.S. Federal Reserve Chair Jerome Powell and the bond traders that’ve been watching his every word are getting more food for thought this morning, with a much stronger than expected U.S. jobs report. Non-farm payrolls jumped by 379,000, compared to the estimate for 200,000. The 10-year U.S. Treasury yield spiked above 1.6 per cent in the minutes after the data was released, as bets get placed on where the world’s largest economy is heading and how the Fed will react. Manulife Investment Management Head of Macro Strategy Frances Donald told us we’ve entering a phase were “good news is bad news for the markets.”
OPEC+ RIPPLE EFFECT
The price of West Texas Intermediate crude oil broke through US$65 per barrel today for the first time since January 2020 as the impact from OPEC+’s surprise decision to stand pat continues to be seen in the market. One of the big lingering questions is whether the cartel and its partners are inviting another showdown with U.S. shale producers. On that front, Saudi Arabia’s energy minister doesn’t appear to be worried. “’Drill, baby, drill’ is gone forever,” is how Prince Abdulaziz bin Salman verbally shrugged off that issue yesterday afternoon.
A LINE IN THE SAND ON LINE 5
While the federal government very quickly turned the page on Keystone XL after that controversial pipeline was blocked by U.S. President Joe Biden, it looks like Justin Trudeau’s government is prepared to take a much stronger stance on Enbridge’s Line 5 (which is a crucial conduit for oil to central Canada) if Michigan’s governor makes good on her plan to shut it down. “The federal government is watching it like a hawk,” Natural Resources Minister Seamus O’Regan told a House committee yesterday. We’ll chase perspective from a range of stakeholders.
BEIJING SETS GROWTH TARGET
China Premier Li Keqiang opened the National People’s Congress overnight by setting this year’s economic growth target at more than 6 per cent, low-balling the outlook in comparison to economists who are eyeing an 8.4 per cent jump in gross domestic product this year. To better understand the relatively conservative forecast, it should be noted that Li also said his government wants to cut its deficit this year to 3.2 per cent of GDP, compared to 3.6 per cent last year.
OTHER NOTABLE STORIES
- Hudson’s Bay Company is splitting off Saks’ online business into a separate entity, and has lined up an immediate US$500-million infusion from Insight Partners. The move is being framed as an opportunity to arm Saks.com with greater financial resources to capitalize on the ecommerce boom.
- Old Navy and Athleta were Gap's saving graces in the fourth quarter, as higher sales for those banners helped mitigate the impact of double-digit sales declines at Banana Republic and Gap itself. Overall fourth-quarter fell short of expectations at $4.4 billion.
- We’ve got Martinrea Executive Chairman Rob Wildeboer on The Open. His auto parts company just reported record fourth-quarter profit and touted some notable new contracts, including a few deals with Tesla. Watch for the interview at 10:10 a.m.
NOTABLE RELEASES/EVENTS
- Notable data: Canada trade balance, U.S. non-farm payrolls, U.S. trade balance
- 11:30 a.m. ET: Prime Minister Justin Trudeau discusses COVID-19 situation alongside Health Minister Patty Hajdu, Procurement Minister Anita Anand, Intergovernmental Affairs Minister Dominic LeBlanc, Chief Public Health Officer Dr. Theresa Tam, Deputy Chief Public Health Officer Dr. Howard Njoo
- 12 p.m.: Environment and Climate Change Canada hold technical briefing on proposed Greenhouse Gas Offset Credit Systems regulations
- 1 p.m.: Ontario Premier Doug Ford leads announcement on province’s COVID-19 vaccination plan
- 2:15 p.m.: U.S. President Joe Biden and Vice-President Kamala Harris receive economic briefing from Treasury Secretary Janet Yellen (WATCH for on-cam comments off the top)
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