Welcome to our first Morning Market Brief. We hope it gives you insights into key events that affect financial markets and your investments. 

 

We’re monitoring several critical economic announcements this week that will likely drive market activity. We will carefully assess Canada’s inflation data to predict the Bank of Canada’s (BoC) next move. The U.S. Federal Reserve Board (Fed) makes its second rate announcement of 2023, weighing elevated inflation against potential risks in the financial system.  
 

• Market participants will continue to focus on the health of the global financial system. Following the collapse of SVB, then troubles at First Republic Bank and Credit Suisse Group AG, the risk of contagion within the industry is weighing on investor sentiment. Over the weekend, UBS acquired Credit Suisse to help mitigate the potential damage. Furthermore, five central banks, including the Fed and BoC, will look to enhance liquidity by moving auctions of U.S. dollars through standing swap lines from weekly to daily. 
   
• Statistics Canada will release February’s inflation data on Tuesday. Inflation has eased in recent months, reaching its lowest level since February 2022 in January. 
   
• On Wednesday, markets will focus on the Fed’s interest rate announcement. Markets are pricing in a 25 basis point rate increase. Still, concerns over the financial system in the wake of the Silicon Valley Bank (SVB) collapse could have the Fed reconsidering its stance. 
   
• On Thursday, attention will turn to the Bank of England (BoE) as it makes its next interest rate decision. The BoE has raised interest rates at 10 consecutive meetings to tame elevated inflationary pressures. 
   
• Earnings announcements will continue this week. In Canada, notable earnings announcements include Boyd Group Services Inc. and Freshii Inc. In the U.S., Nike Inc., GameStop Corp. and General Mills Inc. will release earnings.  
   

We will watch to see if elevated inflationary pressures and a wider disparity between the policy interest rates of the BoC and Fed put downward pressure on the Canadian dollar. In addition, concerns of contagion in the banking sector could cause volatility in financial markets over the week. However, the co-ordinated actions of major central banks beginning today may help ease investor angst. 

 

We’re continuing to monitor the global financial system. If you have any questions, please get in touch with me. We can discuss the impact that elevated inflation and higher rates may have on your investments and broader financial plan.