Market Pulse - The week in review - Nov. 27th 2023

THIS WEEK’S RECAP:

 

October saw a deceleration in Canada's yearly inflation rate to 3.1%, primarily due to a decrease in gasoline prices. This easing was reflected in the Bank of Canada's core inflation indicators as well. Canada's economic outlook would suggest potential for rate cuts as early as the second quarter of next year. While stopping short of any commitment, Governor Macklem reaffirmed that inflation does not need to be back at 2% to cut rates because monetary policy operates with lags. They are watching the Bank of Canada's core inflation measures as an underlying guide, highlighting the three-month annualized pace of inflation, currently around 3%, is trending in the right direction.

 

A change in tone: Central bankers across major economies are gradually acknowledging that monetary conditions may now be tight enough to overcome high inflation. However, they are refraining from any commitment to reverse course on rates quite yet. Nevertheless, driven by lower interest rate expectations and solid earnings growth in the third quarter, market conditions are poised positively as we move into the final month of the year.

 

Oil dropped 5% midweek as the OPEC+ meeting, originally scheduled for Sunday, was postponed to November 30 and moved online instead of being held at their Vienna headquarters. This amid concerns that internal disagreements are hindering the group's decision on next year's production levels.

 

Existing home sales in the US fell to a decade-low in October, hindered by historically high mortgage rates and limited supply. Home sales activity in Canada has been poor as well, largely for the same reasons. Buying a new home is a major part of overall household expenditures, and the current deceleration in this sector is weighing on consumer spending.

 

 

ON DECK FOR NEXT WEEK:

 

In Canada, Q3 GDP will be released Thursday, and is expected to show another quarter of marginally negative growth. The ramifications on financial markets should be limited. However, be prepared for headlines about the Canadian economy being in recession after two negative quarterly GDP prints (albeit barely into negative territory).

 

Canadian employment results for November will be published Friday. Policymakers and investors are monitoring all labour data closely for confirmation that labour shortages (job openings) are abating, and companies are tightening their belts.

 

Flash estimates from several countries for November manufacturing and services activity will provide an early indication on any shift or extension of economic momentum.

 

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IMPORTANT DISCLAIMERS

 

This document is provided as a general source of information and should not be considered personal, legal, accounting, tax or investment advice, or construed as an endorsement or recommendation of any entity or security discussed. Every effort has been made to ensure that the material contained in this document is accurate at the time of publication. Market conditions may change which may impact the information contained in this document. All charts and illustrations in this document are for illustrative purposes only. They are not intended to predict or project investment results. Individuals should seek the advice of professionals, as appropriate, regarding any particular investment. Investors should consult their professional advisors prior to implementing any changes to their investment strategies. Certain statements contained in this communication are based in whole or in part on information provided by third parties and CI Global Asset Management has taken reasonable steps to ensure their accuracy. Market conditions may change which may impact the information contained in this document. CI Global Asset Management is a registered business name of CI Investments Inc. © CI Investments Inc. 2023. All rights reserved.