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UBS Still Sees Bank of Canada on Hold This Year Despite Higher Inflation Forecasts

Despite marking up its inflation projections and keeping topline economic growth unchanged, UBS said it continues to expect the Bank of Canada to remain on hold this year.The latest signaling from the BoC is consistent with a cautious approach to changes in the policy rate in either direction, wrote the bank in a note to clients.The Summary of Deliberations from the March policy meeting was consistent with a cautious approach, pointed out UBS.Softer growth and a starting point of uncertainty already weighing on business and consumer confidence leave a dilemma for the BoC, stated the bank. The signaling at the March meeting suggested that the BoC would look through the immediate impact of higher energy costs on inflation but would be watching for signs of price pressures broadening when considering the appropriate policy stance.The Summary of Deliberations acknowledged the soft starting point for the economy: "The war in Iran had clearly added a new layer of uncertainty, but they agreed that they should not lose sight of the other risks already facing the economy: shifting US trade policy, the upcoming review of the Canada-United States-Mexico Agreement, and ongoing structural changes."The discussion at the March meeting also drew upon a recent speech by Deputy Governor Sharon Kozicki on how the BoC thinks about supply-side shocks: "Members considered the role of monetary policy when a supply shock hits the economy. They noted that inflationary pressures from higher energy prices were expected to push inflation above target with the economy in excess supply. This presents a difficult trade-off for monetary policy."

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Treasury19d ago

Share of Canada's Exports to The U.S. Is Gradually Trending Lower, Says Scotiabank

The share of Canadian exports bound for the United States is gradually trending lower, averaging 76% in 2024 and 72% last year, and coming in at 66% in February 2026, said Scotiabank.This has been driven by a decline in exports to the United States and increasing exports to other regions, mainly Europe, noted the bank in a note published last week.In February, exports to the U.S. rose 4.4% month over month but were down 10.4% compared with 2024. Exports to other countries rose 10.5% after a weak January and were up 42.4% from 2024, though much of this has been driven by elevated overseas exports of gold. On the import side, the share of Canadian imports from the U.S. was down slightly in February to 59% from 62% in 2024.Canada continues to benefit from a relatively low effective tariff rate on total exports. 3.1% is Scotiabank's latest estimate, based on pre-tariff trade flows, of the increase in tariffs since end 2024, thanks to most of Canada's trade with the U.S. continuing on a tariff-free basis under CUSMA. This is down from 4.5% in February due to the country-specific U.S. IEEPA tariffs being replaced by a 10% global tariff.The reported average actual duties paid on U.S. goods imports from Canada was slightly above 3% for the third month in a row, down from close to 4% six months ago. This could tick lower in March, given the tariff changes in late February. The proportion of Canadian goods imported into the U.S. facing tariffs has settled around 10%, pointed out the bank.The U.S. trade deficit is back close to its pre-tariff level. U.S. trade saw significant volatility early in 2025 in response to the tariffs, before stabilizing later in the year. In February, U.S. exports rose 4.2% and imports increased 4.3%, resulting in an increase in the trade deficit to US$57 billion, down from around US$70 billion in 2024.The U.S. import tariffs continue to create inflationary pressures in that country, with the latest estimate of the cumulative impact of the tariffs on the U.S. consumer price index reaching nearly a full percentage point and clouding the outlook for U.S. interest rate cuts, especially given recent increases in oil prices.Tariffs and uncertainty continue to be elevated and dynamic, according to Scotiabank. Although the replacement of the U.S. IEEPA tariffs with the temporary global tariff of 10% was positive for Canada, the vast majority of Canadian trade has been compliant and, as such, exempt from those tariffs. The sectoral tariffs are by far the most impactful for Canada, and haven't been affected by the recent changes.

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US Markets19d ago

Stocks Rise, Oil Declines Pre-Bell as US, Iran Agree to Two-Week Ceasefire

US equity futures were pointing higher on Wednesday while oil prices fell as the US and Iran agreed to a two-week ceasefire, potentially paving the way for the reopening of the crucial Strait of Hormuz.The S&P 500 rose 2.6%, the Dow Jones Industrial Average increased 2.4% and the Nasdaq advanced 3.3% before the opening bell. The S&P 500 and the Nasdaq finished the previous trading session in the green, while the Dow closed lower.In a social media post on Tuesday, President Donald Trump announced that he agreed to suspend "the bombing and attack of Iran for a period of two weeks" based on conversations and requests from Pakistan's Prime Minister Shehbaz Sharif and Field Marshal Asim Munir. The suspension of hostilities is subject to Iran agreeing to the "complete, immediate, and safe opening" of the Strait of Hormuz, according to Trump."We received a 10 point proposal from Iran, and believe it is a workable basis on which to negotiate," Trump said in his post. "Almost all of the various points of past contention have been agreed to between the (US) and Iran, but a two week period will allow the agreement to be finalized and consummated."Trump had previously set an 8 pm ET deadline on Tuesday for Iran to fully reopen the strait or face destructive military attacks.In a separate statement shared on X, Iran's Foreign Minister Seyed Abbas Araghchi said Tehran will halt its defensive operations if attacks against it are stopped. Iran will also allow "safe passage" through the Strait of Hormuz, a key route for crude flows, during the two-week ceasefire through coordination with its armed forces and "with due consideration of technical limitations," according to Araghchi.Pakistan has invited US and Iranian delegations to Islamabad on Friday to further negotiate a "conclusive agreement to settle all disputes," Sharif said on X. Reuters reported earlier in the week that Pakistan put forward a proposal to both countries for an immediate ceasefire followed by a broader agreement to permanently end their war.The US-Israel war with Iran began at the end of February, disrupting shipments through the Strait of Hormuz and driving up energy prices. The conflict spread across the Middle East, with Gulf countries forced to intercept missiles and drones fired by Tehran.West Texas Intermediate crude oil dropped 16% to $94.39 a barrel in premarket action, while Brent fell 14% to $94.18.The Fed is scheduled to post minutes of its last policy meeting at 2 pm, which will be assessed for fresh insight on the central bank's monetary policy. Last month, the central bank held interest rates steady, saying the Middle East conflict poses uncertainty to the US economic outlook.Markets widely expect the Fed to keep its benchmark lending rate steady at its next policy meeting later in April, according to the CME FedWatch tool.Treasury yields plunged before the open, with the two-year rate declining 9.7 basis points to 3.74% and the 10-year rate falling 9.5 basis points to 4.25%.Wednesday's economic calendar also has the weekly mortgage applications bulletin at 7 am, followed by the weekly EIA domestic petroleum inventories report at 10:30 am.Delta Air Lines (DAL) and RPM International (RPM) report their latest financial results before the bell, among others. Constellation Brands (STZ) releases its earnings after the markets close.Shares of Levi Strauss (LEVI) jumped 11% pre-bell as the denim maker lifted its full-year outlook. Palo Alto Networks (PANW) inclined 2.1% while Trade Desk (TTD) was up nearly 4%.Gold gained 2.5% to $4,800 per troy ounce, while bitcoin climbed 4.3% to $71,663.

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Financial News · Live Terminal

UBS Still Sees Bank of Canada on Hold This Year Despite Higher Inflation Forecasts

Share of Canada's Exports to The U.S. Is Gradually Trending Lower, Says Scotiabank

UBS Still Sees Bank of Canada on Hold This Year Despite Higher Inflation Forecasts

Share of Canada's Exports to The U.S. Is Gradually Trending Lower, Says Scotiabank

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Stocks Rise, Oil Declines Pre-Bell as US, Iran Agree to Two-Week Ceasefire