Media Room
The week in the markets –
July 14, 2023
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Good news is good news, again
- U.S. Consumer Price Index released; inflation may be under control
- Bank of Canada raises the overnight rate to 5.0%
- Earnings season around the corner
The U.S. Consumer Price Index (CPI) and the Bank of Canada rate decision for July were top of mind for investors this week. U.S. CPI dropped to a two-year low, reaching 3.0% year-over-year, for June, marking a significant decline and a third of where it was last year. The month over month CPI data came in at 0.2%, which is better news for forward inflation.
The CPI increase remains higher than desired by the U.S. Federal Reserve (the Fed). There is still a high probability of a rate hike at the end of this month, but if the Fed can be patient further rate hikes may not be needed.
Looking under the hood, energy was the biggest detractor, with gasoline prices down 26.5% compared to last year. In the services category, airfares declined 18.9% and inflation in the services sector continued trending downward for a fourth consecutive month. Another indicator, the Producer Price Index (PPI), came in lower than expected, up 0.1% from the previous month and since it captures an average price shift before reaching consumers, it serves as a good proxy for inflation at the wholesale level.
Here at home, the Bank of Canada (BoC) raised its overnight rate by 25 basis points to 5%, the highest it has been since 2001. The BoC’s monetary report suggests a longer timeframe to achieve its target of 2%, which may happen as early as 2025. When pressed, the Governor of the BoC, Tiff Macklem emphasized a cautious stance, "We've been clear about the indicators we are watching, and it's clearly too early to be talking about interest rate cuts… we are certainly trying to balance the risks of over- and under-tightening and we'll be taking it one meeting at a time," he added. The next meeting for the BoC is in September.
Earnings season has kicked off for the second quarter, as investors comb through earnings forecasts to see if the momentum for equities can continue for the rest of the year.
This week's market closing value - week ending July 14, 2023
(As of 4:00 PM ET.*)
| EQUITY INDICES | Level | Change | 1-week | YTD | 1-year | 5-year |
| CAD | CAD | CAD | CAD | |||
| S&P/TSX | 20,274.08 | 426.50 | 2.15% | 4.66% | 10.61% | 4.13% |
| S&P 500 | 4,503.38 | 94.34 | 1.76% | 14.98% | 19.79% | 10.07% |
| DJIA | 34,510.61 | 775.60 | 1.91% | 1.71% | 13.60% | 6.75% |
| FTSE 100 | 7,434.57 | 177.63 | 4.11% | 5.54% | 17.88% | -0.71% |
| CAC 40 | 7,374.54 | 262.66 | 5.71% | 16.67% | 40.84% | 5.57% |
| DAX | 16,105.07 | 501.67 | 5.23% | 18.46% | 45.32% | 4.39% |
| Nikkei | 32,391.26 | 2.84 | 1.93% | 14.61% | 22.64% | 3.11% |
| Hang Seng | 19,413.78 | 1,048.08 | 5.48% | -4.24% | -5.24% | -7.23% |
| CURRENCY RETURNS | CAD | Change | 1-week | YTD | 1-year | 5-year |
|---|---|---|---|---|---|---|
| USD | 1.3226 | -0.0050 | -0.38% | -2.31% | 0.82% | 0.10% |
| Euro | 1.4847 | 0.0284 | 1.95% | 2.42% | 12.97% | -0.70% |
| Yen | 0.0095 | 0.0002 | 1.92% | -7.67% | 0.88% | -4.05% |
| CANADIAN TREASURIES | Yield | Change | COMMODITIES | USD | Change |
|---|---|---|---|---|---|
| 3-month | 4.95 | 0.08 | Oil | $75.37 | $1.73 |
| 5-year | 3.77 | -0.21 | Gold | $1,954.61 | $29.59 |
| 10-year | 3.37 | -0.20 | Natural Gas | $2.54 | -$0.03 |
| CANADIAN PRIME RATE |
|---|
| 7.20% |
*The data contained in the charts above is provided by Bloomberg as of 4:00 PM ET. Please note that the final closing market values may vary due to data delays and market settlement.
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