Stock futures are flip flopping this morning as investors brace for a busy day featuring major tech earnings, updates on the Iran war, and central bank decisions (including what could be Jerome Powell’s final policy meeting as head of the Fed). Markets are mainly focused on results from key Mag Seven companies, Alphabet, Amazon, Meta, and Microsoft, who report after the market closes today. Investors will be looking to see if massive AI-related capital expenditures are translating into strong revenue growth. This comes just a day after OpenAI pushed back against reports it missed internal growth targets, calling them “clickbait” while saying its consumer and enterprise businesses are “firing on all cylinders.” Markets were less convinced, with the Nasdaq falling -0.9% yesterday and shares of partners like SoftBank, Oracle, and CoreWeave falling, highlighting broader investor concern around the pace and sustainability of AI spending.
Holding pattern continues. The Bank of Canada is expected to keep interest rates unchanged today at 2.25% as policymakers balance the inflationary effects of the Iran-driven oil shock against ongoing economic weakness from tariffs and soft domestic growth. While headline inflation has risen due to rising gasoline prices, underlying core inflation remains relatively under control, giving Governor Tiff Macklem room to remain patient for now. The central bank is likely to continue looking through the immediate energy price spike unless broader second-round inflation pressures emerge, while also acknowledging heightened uncertainty around growth, consumer spending, and business investment. This comes after the release of the federal government’s latest fiscal update. The budget reinforces Canada’s strategy of using elevated government spending and stronger tax revenues, boosted in part by higher oil prices, to finance long-term economic growth initiatives rather than chipping away at the deficit. More on the budget down below in fixed income.
End of an era. At what is widely expected to be Jerome Powell’s final meeting leading the Fed, policymakers are expected to keep interest rates unchanged as sticky inflation, elevated energy prices, and a still-resilient labour market leave little justification for rate cuts. With core inflation remaining around 3% and oil prices near $100 per barrel, the Fed is expected to maintain a cautious stance, prioritizing inflation control over growth concerns for now. Markets are focused less on the rate decision itself, which is priced in for the most part, and more on Powell’s tone as leadership is expected to transition soon to Kevin Warsh.
Consumer confidence in the U.S. unexpectedly improved in April, reaching its highest level of the year as Americans became somewhat more optimistic about the labour market and near-term job prospects. While concerns around inflation, higher borrowing costs, and geopolitical risks remain, signs of labour market stabilization and the temporary Iran ceasefire appear to have supported sentiment. Still, confidence levels aren’t overall great, with consumers continuing to prioritize essential spending and lower-cost discretionary activities over larger purchases like travel.
Back to basics. Cracks in the private credit market are driving investors back toward traditional public bond funds, as concerns grow over unclear valuations, limited liquidity, and weaker-than-expected returns in private lending vehicles. Rising redemption pressures, particularly in software-heavy private credit portfolios facing AI-related disruption, have exposed the downsides of illiquidity just as public fixed-income markets are offering competitive yields, transparency, and easier access to capital. As a result, bond funds are seeing record inflows, with investors appearing to favour liquidity and flexibility over the shrinking return premium once offered by private credit.
European equities have lost momentum after an initially strong start to the year, as the region’s proximity to both the Iran and Ukraine conflicts has increased economic vulnerability and weakened investor confidence. Rising energy costs, deteriorating business activity, and growing input prices are pushing the euro-area economy back toward recession, particularly in Germany, while U.S. markets continue to benefit from stronger growth, tech leadership, and more resilient corporate earnings. As a result, analysts have lowered expectations for European stocks, with earnings revisions turning negative and sectors like banks and defense losing some of their earlier appeal.
A modern day Romeo and Juliet. A determined husky from Regina named Missy is in the news after escaping her yard and making her own way to her doggy daycare. While she was meant to be home, Missy dug under the gate and followed her usual route to her doggy daycare. She didn’t appear dressed to impress, arriving muddy but excited when she saw her daycare boyfriend, Shaggy. Despite the fact she wasn’t supposed to be there, staff still welcomed her in and cleaned her up for her date. If you’re curious what the couple look like, you can find their prom photo here.
Diversion: On second thought I’ll stay on the boat