Market Pulse - The week in review - Feb 14th

THIS WEEK’S RECAP:

 

The latest Canadian jobs report showed moderate progress with a headline figure of 37,000 new jobs, yet the underlying details present a mixed picture: most positions were part-time and in the public sector. Despite a slight decline in the unemployment rate to 5.7% due to a decrease in labour force participation, the pace of job creation is not keeping up with population growth, and while wage growth has decelerated to 5.3% year-over-year, it remains historically high.

 

The Bank of Canada's quarterly survey of market participants (asset managers and banks) showed that a majority of respondents predict the Canadian economy will achieve sub 1% growth in the current year. Inflation is expected to decline steadily, with a median forecast of 2.3% by year-end. These trends, which align with the Bank of Canada's estimates, reaffirm our view of a likely softening on monetary policy in coming months.

 

Bank lending standards in the US remain restrictive and loan demand remains soft. The quarterly Senior Loan Officers Survey report provided a read on credit conditions for Q4. On the good news front, the trend of deteriorating lending conditions and weak loan demand has plateaued. However, bank lending standards do remain tight, and loan demand is subdued.

 

The 2023 Consumer Price Index (CPI) revisions in the U.S. have left the core measures largely unchanged, suggesting a continuation of the disinflationary trend observed over the last six months. Minor adjustments, including a slight decrease in December's core services excluding rents and a small upward revision in the 3-month and 6-month core annualized rates, do not significantly alter the overall picture.

 

Global stock markets are reaching new all-time highs, with Japan and the U.S. setting new records and Canada not far behind. U.S. firms are delivering strong earnings, reflecting a particularly strong economy. The pace of these rallies, and the rising valuations are raising some concern, and could lead to some near-term consolidation. Meanwhile, China equities have rebounded from a sluggish start to the year on the back of regulatory oversight changes, and news that their sovereign wealth fund is adding to its domestic equity position.

 

 

ON DECK FOR NEXT WEEK:

 

U.S. CPI for January will be released Tuesday morning. With the Federal Reserve on a data dependent path, this will be a key update on the trajectory of inflation. Additionally, retail sales data will be published on Thursday, providing insights into consumer demand.

 

Canada will provide an update on housing activity, with existing home sales and housing starts for January to be reported mid-week.

 

Q4 earnings season in Canada will ramp up over the next several weeks.

 

For more information, please visit ci.com.

 

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. 2024. All rights reserved.