Market Pulse - The week in review - May 13th 2024

THIS WEEK’S RECAP:

 

▪ The Federal Reserve’s 1Q Senior Loan Officer Opinion Survey revealed continued tightening in business lending standards and ongoing weakness in business loan demand. Several FOMC participants also spoke during the week. While several expressed a view that current policy was restrictive enough others questioned the current policy stance given inflation has stalled.

 

▪ The Bank of England (BoE) voted by a majority of 7-2 to maintain the bank rate at 5.25%. Two members of the Bank’s Monetary Policy Committee preferred to reduce the policy rate to 5%. Notably, Governor Bailey signaled that “it’s likely that [the BoE] will need to cut the bank rate over the coming quarters and make monetary policy somewhat less restrictive... possibly more so than currently priced into market rates”.

 

▪ UK GDP data was released on Friday and suggested the economy rebounded after falling into a technical recession during the second half of 2023. 1Q GDP growth was +0.6% QoQ, the strongest pace of growth since 4Q21.

 

▪ Canada’s labour market recorded a strong employment gain for April (+90K). Strength continues to be underpinned by robust population growth. The unemployment rate was unchanged at 6.1% and wage growth decelerated to 4.7% YoY, the slowest pace of growth since June 2023. While the strong gain in employment and strength in total hours worked are positives for 2Q GDP growth, data remain consistent with an easing in labour market conditions. The Bank of Canada will likely place more weight on the April CPI data due out on May 21 ahead of their early June monetary policy decision.

 

 

ON DECK FOR NEXT WEEK:

 

▪ US CPI for April, due out on Wednesday, will be in focus. The data will impact expectations for the timing of potential Fed cuts. Retail sales data will also land at the same time and inform our view on the health of the US consumer. US PPI data will be released one day earlier. Several FOMC participants will also be speaking throughout the week.

 

▪ In Canada, housing starts and existing home sales for April will both be in focus on Wednesday.

 

▪ 1Q GDP data will be released for Japan and the Eurozone. Growth is expected to have contracted in Japan and to have remained soft in the Eurozone.

 

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 andCI 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.