Today
U.S. markets are closed for the Juneteenth holiday, but futures continued to trade. In thin conditions, U.S. and Canadian equity markets are trading lower. Overseas, Asian and European markets also declined. Global markets have been rattled by the escalating Iran-Israel conflict following Israel’s strike on Iran’s nuclear facilities, raising fears of regional spillover and potential disruptions to global oil supply. Oil futures edged higher this morning, bringing month-to-date gains to over 20%. The updated “dot plot” revealed widening divisions among policymakers, with a slim majority still projecting two rate cuts this year, while an increasing number for no cuts at all.
Hawks continue to fly. The Fed kept interest rates unchanged at 4.25%-4.5% yesterday and maintained its projection for two rate cuts in 2025, though some officials now expect fewer cuts amid persistent uncertainty about the economic impact of Trump’s policies, including tariffs, tax changes, and spending plans. The Fed downgraded its growth forecast, raised inflation expectations to 3%, and sees unemployment rising slightly to 4.5%. While tariffs could pressure inflation higher and slow growth, labour market stability supports the Fed’s cautious approach. Officials remain focused on balancing the risks of tariff-driven inflation with potential economic softness as they monitor evolving policy and data.
The BOE also left rates unchanged 4.25%, but appeared dovish, in a more divided vote than expected as policymakers reacted to signs of labour market softening and diminishing growth against a backdrop of mounting geopolitical tensions. Six of the BOE’s nine Monetary Policy Committee members voted to leave rates unchanged while three preferred an immediate 25 bps reduction. The decision left rates on course for a potential quarter-point cut in August with the corresponding minutes showing that the committee “expected a significant slowing over the rest of the year” in pay growth as the jobs market continues to loosen. Striking a dovish note, it said there were “some greater signs of disinflationary pressures from the labor market.” It left its core guidance unchanged that future rate cuts will be “gradual and careful.”
Staying with central banks, BoC Governor Tiff Macklem warned that core inflation in Canada is running hotter than expected, with price pressures potentially firmer than previously thought, partly due to the impact of tariffs and counter-tariffs. While the broader labour market remains stable outside trade-sensitive sectors, he noted uncertainty about how long inflationary pressures could persist and emphasized the importance of watching upcoming inflation data before the next interest rate decision on July 30. Macklem stressed that monetary policy will proceed cautiously to balance supporting the economy while ensuring inflation remains stable and urged Canadian businesses to diversify exports beyond the U.S. to reduce economic vulnerability. While he seemed encouraged by the progress made toward a new Canada-U.S. trade deal, he noted that it would not solve Canada’s deeper structural risks.
With U.S. markets closed today, let’s turn our attention to Europe. European companies are being urged to capitalize on strong equity markets and proceed with IPOs despite global trade tensions and market volatility. Investors and fund managers emphasize that now is an opportune window, driven by strong year-to-date gains in European stocks and solid demand from growth-focused funds, particularly for small- and mid-cap firms. Recent successful IPOs, such as Lottomatica’s, have further encouraged private equity firms to list portfolio companies, with Blackstone’s Cirsa Enterprises among the latest to announce an offering. While regulatory hurdles and limited analyst coverage continue to pose structural challenges, the momentum in Europe’s equity markets and relative resilience amid global turbulence are creating favourable conditions for listings.
Carney must have been listening to Tiff, with India and Canada now moving to restore full diplomatic relations by reinstating ambassadors after nearly two years of strained ties following allegations of Indian involvement in the killing of a Canadian Sikh separatist. Prime Ministers Narendra Modi and Mark Carney agreed at the G7 Summit to resume investment talks, free-trade negotiations, and cooperation in critical technologies and supply chain resilience, despite ongoing tensions over Sikh separatist groups. Both countries aim to isolate judicial matters from broader relations while developing new security information-sharing mechanisms. Economic ties have remained strong throughout the diplomatic freeze, and both nations see mutual benefit in diversifying trade, with a potential free-trade agreement aligning with their respective strategic goals.
Flights can certainly get expensive and saving air miles can take ages, but this may not be the right move. A South Florida man was convicted of wire fraud and unlawfully entering secure airport areas after posing as a flight attendant to book over 120 free flights between 2018 and 2024, successfully flying on 34 of them without paying. He used false employment information, claiming to work for seven different airlines with about 30 fake badge numbers and hire dates. Although he passed all TSA security screenings and posed no physical threat to passengers, his actions violated air travel laws. The man is set to be sentenced later this summer, let’s just hope he doesn’t have to fly to court.
Diversion: Trying to help them out
