| Your weekly commentary – For the week ended June 16 |
| Global equity markets advanced over the week ended June 16 as investors considered implications from the U.S Federal Reserve Board’s decision to pause its cycle of interest‑rate increases. The S&P/TSX Composite Index rose, supported by the Consumer Discretionary and Information Technology sectors. U.S. equities, as measured by the MSCI USA Index, gained. Yields on 10-year government bonds in Canada and the U.S. moved higher. Oil prices rose over the week, while gold prices fell. |
Robust first quarter for Canadian restaurants- According to Statistics Canada, the restaurant industry generated first-quarter 2023 revenue comparable to pre-pandemic levels in the first quarter of 2019.
- Restaurants play a crucial role in the economy, helping to drive the Retail sector.
- Although retail food sales declined, food services as a percentage of total food sales also returned to pre-pandemic levels.
- The data suggests consumers are returning to pre-pandemic dining-out habits.
- Despite generating similar revenue to the first quarter of 2019, the restaurant industry operated with 100,000 fewer employees, including accommodation sites.
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Fed holds steady as expected- In a widely anticipated move, the Fed maintained the federal funds rate target at 5%‑5.25%.
- Fed Chair Jerome Powell remarked that the tight labour market was showing signs of balancing.
- Despite overall inflation slowing to 4% last month, the core rate remained at 5.3%, well above the Fed's 2% target.
- Many Fed officials believe additional interest-rate increases might be necessary in 2023.
- Policymakers will also closely monitor the credit environment, especially to see whether any stress lingers in the banking sector.
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ECB raises by 25 basis points- The European Central Bank (ECB) raised interest rates by 25 basis points during its June meeting.
- The interest rate on its main refinancing operations reached 4%, the highest since the 2008 crisis.
- The deposit facility rate increased to 3.5%, the highest in 22 years.
- ECB President Lagarde stated the central bank would likely continue raising rates in July since measures on inflation indicated that it remained too far in excess of the ECB’s 2% target.
- Inflation in the eurozone for May was 6.1%, although it has been easing. Lagarde also noted the central bank was not considering a pause.
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IEA expects slower global oil demand- The International Energy Agency (IEA) expects the transition from fossil fuels to be accelerated by high oil prices.
- Oil consumption in 2024 is expected to grow at half the rate of the previous two years.
- Electric vehicles may contribute to the decline in oil use by cars, limiting oil demand this decade.
- Global oil markets continue to readjust after disruption from the COVID-19 pandemic and the Russia-Ukraine conflict.
- Expectations point to a potential tightening of global oil markets in the short term, with production cuts by OPEC+ counterbalancing increases in supply.
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| Equity markets | Level | YTD | 1 Yr | | S&P/TSX Composite Index C$ | 19,975.38 | 3.05% | 5.52% | | MSCI USA Index US$ | 4,190.29 | 15.11% | 19.98% | | MSCI EAFE Index US$ | 2,170.84 | 11.67% | 19.08% | | MSCI Emerging Markets Index US$ | 1,030.03 | 7.70% | 2.53% | | MSCI Europe Index US$ | 1,949.81 | 12.60% | 21.24% | | MSCI AC Asia Pacific Index US$ | 169.62 | 8.91% | 8.17% | | Fixed income market | Level | YTD | 1 Yr | | FTSE Canada Universe Bond Index C$ | 1,069.61 | 1.76% | 3.81% | | FTSE World Broad Investment Grade Bond Index US$ | 207.27 | 2.50% | 0.45% | | Currency | Level | YTD | 1 Yr | | CAD/USD | 0.7563 | 2.51% | -1.45% | | Commodities | Level | YTD | 1 Yr | | West Texas Intermediate (US$/bbl) | 70.75 | -11.85% | -35.42% | | Gold (US$/oz) | 1,956.38 | 7.24% | 6.35% |
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| Market performance – as at June 16, 2023 |
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