Here are five things you need to know this morning:
Decision day at the BoC: The news of the day will be the Bank of Canada’s latest policy pronouncement, where at 9:45 eastern time this morning the central bank is expected to lower its benchmark lending rate to three per cent from 3.25 per cent. With inflation below the bank’s target (and well within the acceptable range for a full year now), one could make an argument to cut by even more, but the spectre of a looming trade war with the U.S. will likely compel the bank to keep its tinder dry, in case a monetary policy bazooka is called for down the line. We’ll hear more about the bank’s line of thinking at a press conference at 10:30 this morning, which we will have live on BNN Bloomberg and BNNBloomberg.ca, and of course we will have expert analysis and reaction through the day.
Then it’s the Fed’s turn: Tiff Macklem et al will dominate the news cycle in Canada, but from a global perspective, the main event will happen at 2 p.m. when U.S. Federal Reserve Chair Jerome Powell will announce the U.S. central bank’s policy decision. Currently the high end of the bank’s rate is 4.5 per cent, but with inflation and the job market still showing strength, the Fed is in far less of a rush to lower rates any more than they are. Markets expect the Fed to stand pat, which would make the gap between Canada and the U.S.’s rate as much as 150 basis points. That’s high by historical standards, and a recipe for loonie weakness. We’ll hear more about what the Fed thinks about the state of things at a press conference starting in the 2 o’clock hour eastern time. If you have the word “tariff” on your Fed-speak bingo card, you can expect that one to pay off.
CPKC reports after the bell: In corporate earnings, the biggest event on the Canadian calendar is likely to be the numbers from Canadian Pacific Kansas City, the transcontinental rail carrier that reports after markets close today. Rail company earnings are economic bellwethers under normal circumstances, as activity and rates on their byzantine freight networks are an excellent barometer of the overall health of the economy. But the numbers will be especially fascinating this time around, as CPKC in particular owns rail lines in Canada, the U.S. and Mexico, making the company a canary in the coal mine that will sing about any out of the ordinary signs of a potential continental trade war. Tariff talk is likely to dominate the analyst call, if not the quarterly performance already in the rearview mirror.
Celestica earnings worth watching too: Also on the calendar are earnings from TSX-listed Celestica Inc. The tech company has been a market darling for more than a year now, riding the artificial intelligence hype wave to a more than 300 per cent gain since the start of 2024. But they lost 28 per cent of their value in Monday’s DeepSeek-fuelled selloff. Analysts remain very bullish on the company’s prospects, however, with many declaring this week’s selloff a chance to buy the dip, redoubling their price targets and buy ratings in the past 48 hours.
Starbucks sales decline goes from grande to short: Shares in Starbucks are percolating this morning after the coffee chain posted quarterly results before the bell, numbers that showed same-store sales come in better than expected. They still fell by four per cent, but that was ahead of the seven per cent decline from the previous three-month period, and ahead of what the street was expecting. Newly minted CEO Brian Niccol told analysts on a conference call this morning that he is seeing progress in his plan to turn the company around by focusing on the customer experience. “Baby steps,” he told analyst on a conference call this morning, “but all moving in the right direction.” Investors seem to agree as the shares are up by more than three per cent premarket.
