Today
Futures are pointing to a higher open with markets continuing to digest comments from the Federal Reserve after bumping rates higher by 25 bps yesterday. U.S. regional bank stocks are weighing on the market, as comments from Treasury Secretary Janet Yellen, who said the U.S. is not currently working on “blanket insurance” for bank deposits, in comments to the U.S. Senate appropriations subcommittee. Across the pond, the Bank of England went ahead with another rate hike today, increasing its benchmark rate 25 bps to 4.25, its highest level since 2008. Higher than anticipated inflation numbers released yesterday quelled any market expectations of a pause. The BOE noted that further increases were possible should inflation remain a risk and that it believes a recession can be avoided for now at least. Speaking about the banking sector and contagion worries, the BOE noted that it believes the UK banking system is well capitalized to absorb shocks.
As expected, the Federal Reserve raised interest rates by 25 bps in its ninth consecutive increase since March 2022. The FOMC was unanimous in their decision to raise the federal funds rate to a range of 4.75% to 5%, the highest since September 2007. The Fed signalled that the tightening cycle was not done yet despite the risk of exacerbating a bank crisis that has caused anxiety in global markets. However, in its post meeting statement, the FOMC said that “some additional policy firming may be appropriate” to curb inflation, which contrasts with its previous statements when it referred to “ongoing increases” to rein in prices. Bonds rallied on the noteworthy change in the Fed’s language and equities rallied initially before falling after Fed Chair Powell said rates cuts are not part of their base case this year.
Not so fast. Treasury Secretary Janet Yellen is putting her foot down and said regulators aren’t looking to provide “blanket insurance” for deposits to stabilize the US banking system, and that the heads of recently failed American lenders should be held accountable. Earlier this week, markets got some relief when she said that the US is prepared to take further actions to protect depositors if smaller lenders are threatened and that her staff is studying ways to temporarily raise the federal insurance cap above $250,000 without Congressional approval in the event the crisis grows. A permanent change to the Federal Deposit Insurance Corp.’s $250,000 cap would require Congressional approval.
The federal budget is set to be released next week, but we got a glimpse of what may be in the package. In a speech made yesterday, Finance Minister Chrystia Freeland pledged to exercise fiscal restraint when she delivers the federal budget next week but said the budget will include significant investments in health care and green technology incentives. The budget will also contain affordability measures to help Canadians deal with soaring consumer prices but said that those measures would not impede the BoC’s mission to bring inflation back to its 2% target. This isn’t the first time the federal government has announced affordability measures in the face of soaring inflation, but they are in a more difficult economic environment compared to last year.
Grow grow grow! Canada’s population grew 2.7% in 2022, the fastest expansion among advanced economies. Statistics Canada showed that a record 1,050,110 people were added over a one-year period to Jan. 1, bringing the total population to 39,566,248. International migration accounted for 95.9% of the growth, showing Canada’s commitment to counter the economic drag of an aging populace by opening its doors to newcomers. This marks the first time that growth was by more than a million people in a year, while its industrial peers try different ways to address demographic challenges, including raising the retirement age. If this population growth rate is sustained, the statistics agency said Canada would double in size in about 26 years.
Baseball fans across the globe were on the edge of their seats as Angels teammates MLB MVP and 2-way player Shohei Ohtani, and 3-time MVP Mike Trout squared off for the final at bat at the thrilling WBC finals of Japan vs. USA. The final at bat came down to a battle between each team's captain, who during the regular MLB season are part of a dynamic duo for the Los Angeles Angels. Ohtani had Trout swing and miss three times to conclude the game earning Japan its third WBC title. In 6,174 plate appearances, only 24 times has Trout swung and missed at three pitches. An extremely rare occurrence for Trout, as this amounts to only 0.39% of his at plate appearances. A dramatic finish indeed.
Diversion: Japan won the World Baseball Classic beating the US in the final. But the most memorable moment was
this (wait for it).