News

West Texas Intermediate (WTI) Crude Oil edges higher during the American session on Wednesday after trimming intraday losses. At the time of writing, WTI is trading near the $64.00 mark, but the recovery lacks follow-through as the commodity struggles to extend gains for the fourth straight day.

Canada BoC Interest Rate Decision meets expectations (2.5%)

The full statement from the Bank of Canada September rate decision:

The Bank of Canada today reduced its target for the overnight rate by 25 basis points to 2.5%, with the Bank Rate at 2.75% and the deposit rate at 2.45%.

After remaining resilient to sharply higher US tariffs and ongoing uncertainty, global economic growth is showing signs of slowing. In the United States, business investment has been strong but consumers are cautious and employment gains have slowed. US inflation has picked up in recent months as businesses appear to be passing on some tariff costs to consumer prices. Growth in the euro area has moderated as US tariffs affect trade. China’s economy held up in the first half of the year but growth appears to be softening as investment weakens. Global oil prices are close to their levels assumed in the July Monetary Policy Report (MPR). Financial conditions have eased further, with higher equity prices and lower bond yields. Canada’s exchange rate has been stable relative to the US dollar.

Canada’s GDP declined by about 1½% in the second quarter, as expected, with tariffs and trade uncertainty weighing heavily on economic activity. Exports fell by 27% in the second quarter, a sharp reversal from first-quarter gains when companies were rushing orders to get ahead of tariffs. Business investment also declined in the second quarter. Consumption and housing activity both grew at a healthy pace. In the months ahead, slow population growth and the weakness in the labour market will likely weigh on household spending.

Employment has declined in the past two months since the Bank’s July MPR was published. Job losses have largely been concentrated in trade-sensitive sectors, while employment growth in the rest of the economy has slowed, reflecting weak hiring intentions. The unemployment rate has moved up since March, hitting 7.1% in August, and wage growth has continued to ease.

CPI inflation was 1.9% in August, the same as at the time of the July MPR. Excluding taxes, inflation was 2.4%. Preferred measures of core inflation have been around 3% in recent months, but on a monthly basis the upward momentum seen earlier this year has dissipated. A broader range of indicators, including alternative measures of core inflation and the distribution of price changes across CPI components, continue to suggest underlying inflation is running around 2½%. The federal government’s recent decision to remove most retaliatory tariffs on imported goods from the US will mean less upward pressure on the prices of these goods going forward.

With a weaker economy and less upside risk to inflation, Governing Council judged that a reduction in the policy rate was appropriate to better balance the risks. Looking ahead, the disruptive effects of shifts in trade will continue to add costs even as they weigh on economic activity. Governing Council is proceeding carefully, with particular attention to the risks and uncertainties. Governing Council will be assessing how exports evolve in the face of US tariffs and changing trade relationships; how much this spills over into business investment, employment, and household spending; how the cost effects of trade disruptions and reconfigured supply chains are passed on to consumer prices; and how inflation expectations evolve.

The Bank is focused on ensuring that Canadians continue to have confidence in price stability through this period of global upheaval. We will support economic growth while ensuring inflation remains well controlled.

This article was written by Greg Michalowski at investinglive.com.

• Prior was 2.75%
• Virtually all economists surveyed expected the Bank of Canada to lower rates by a quarter point
• The previous cut was in March
• The rate-cutting cycle started last June

Highlights of the statement:

• Global economic growth is showing signs of slowing
• Preferred measures of core inflation have been around 3% in recent
  months, but on a monthly basis the upward momentum seen earlier this
  year has dissipated
• Underlying inflation is running around 2½%
• The federal government’s recent decision to remove most retaliatory
  tariffs on imported goods from the US will mean less upward pressure on
  the prices of these goods going forward
• Governing Council is proceeding carefully, with particular attention to the risks and uncertainties
• Looking ahead, the disruptive effects of shifts in trade will continue to add costs even as they weigh on economic activity.
• We will support economic growth while ensuring inflation remains well controlled

Key line:

Governing Council will be assessing how exports evolve in the face of US
tariffs and changing trade relationships; how much this spills over
into business investment, employment, and household spending; how the
cost effects of trade disruptions and reconfigured supply chains are
passed on to consumer prices; and how inflation expectations evolve.

The Bank of Canada last held rates steady at 2.75% in late July. The market was 95% priced for a rate cut and 52% priced for a further cut at the October meeting. Further out the curve, the market was pricing in 58 bps in easing by June, including the 25 bps today.

USD/CAD was trading at 1.3761 ahead of the decision, up 23 pips on the day. The initial movement on the decision has been choppy but settled at pre-decision levels which isn’t a big surprise given Fed risks later. Bank of Canada Governor Tiff Macklem will hold a press conference at 1030 am ET.

This article was written by Adam Button at investinglive.com.

Waymo has teamed up with Uber to launch robotaxis in several U.S. markets, and is now joining forces with Lyft to launch in Nashville.

On the lookout for a Sector – Tech fund? Starting with Putnam Global Technology A (PGTAX – Free Report) should not be a possibility at this time.

Shares of ride-hailing service Lyft are the big winners in the pre-market today. They’re currently up 13% in volatile trading.

The gain comes after Waymo said it plans to launch its self-driving taxi service next year in
Nashville and it will partner with Lyft for the first time. Waymo appears to be testing different strategies as some cities use only Waymo’s ‘One’ app while in other cities (Atlanta and Austin) it’s partnered with Uber.

Lyft shares rose more than 20% but have given some back and is trading up 13% shortly after the open.

The market is infatuated with the robotaxi idea, putting huge multiples on the names in the space, including Tesla. The economics of the service are unproven and problems with security and cleaning are unsolved at scale.

Lyft “will provide end-to-end fleet management services including
vehicle readiness and maintenance, infrastructure, and depot operations
in Nashville,” for the Waymo fleet, the companies said.

Waymo is owned by Google, whose shares this week hit a record $250/share as they fight back for market share with ChatGPT after an impressive image app being paired with Gemini named Nano Banana.

Uber remains the ride-hailing leader with a market cap 25 times larger than Lyft.

This article was written by Adam Button at investinglive.com.