Market Pulse - The week in review - April 2nd

▪ Beyond the tragic human toll, the collapse of the Baltimore bridge will temporarily disrupt one of the largest East-Coast ports. With all operations at the port stopped, multiple sectors are affected. This port was the busiest in the US last year for importing automobiles and sugar, and it was the second largest for coal exports. Although reconstructing the bridge will require time, it is expected that port activities will resume shortly without causing material macro-level economic implications.

 

▪ Carolyn Rogers, Senior Deputy Governor of the Bank of Canada, underscored the urgent need for Canada to enhance its productivity. Rogers outlined key areas for improvement, including capital intensity, labour composition, to drive better economic outcomes. Despite efforts, she pointed out that Canada remains behind other leading countries in productivity, advocating for targeted investments and policy changes to strengthen the economy. This is an important topic that will only gain momentum, a hot-button theme for politicians.

 

▪ Throughout the week, multiple Federal Reserve officials emphasized their cautious stance on potential future rate reductions. They highlighted the current strength of the economy, noting that without inflation data indicating a stable movement back towards the 2% target, it would be challenging to reduce the policy rate without risking an increase in inflationary pressures.

 

▪ January saw the Canadian economy expand by 0.6%, surpassing expectations. This growth was fueled by a recovery in activity following the resolution of public sector strikes in late 2023 and significant improvements in manufacturing after a weak December. While this data is just a single month's performance and doesn't necessarily indicate a broader economic turnaround, it does kick off the first quarter's GDP results on a strong note.

 

 

ON DECK FOR NEXT WEEK:

 

▪ On Monday, the Bank of Canada will publish its quarterly business outlook survey, offering key insights into business expectations on prices, sales, employment, and overall business activity nationwide.

 

▪ Updates on the labor market's resilience, along with preliminary insights into manufacturing and service activities for March, will be provided for both Canada and the U.S.

 

 

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