Market Watch – Week of September 10th, 2023
Written By Steven Klos
Investors were trying to downplay concerns about higher-than-expected inflation in the markets. This was because recent data indicated that inflation was staying relatively stable, which strengthened the belief that the Federal Reserve would likely keep interest rates unchanged, at least for the time being. U.S. Treasury yields remained steady as well. Wall Street had largely factored in a pause in interest rate hikes at the upcoming Federal Reserve meeting. Futures pricing data on Wednesday suggested a 97% chance that interest rates would remain unchanged, according to the CME FedWatch Tool. After the release of the inflation data, the U.S. dollar saw a modest increase against a basket of global currencies, suggesting that the possibility of future interest rate hikes by the Fed was not completely ruled out, even after the expected pause next week. Oil prices were relatively stable on Wednesday, hovering near a 10-month high. This was despite earlier expectations of a tight supply of crude oil for the remainder of the year, as a surprise increase in U.S. crude inventories offset those expectations.
In terms of economic news, inflation saw its largest monthly increase of the year in August, primarily due to higher prices for energy and various other goods and services. The consumer price index, which tracks the costs of a wide range of items, rose by 0.6% for the month and was up 3.7% compared to the previous year, according to the U.S. Department of Labor’s report on Wednesday. These figures were in line with economists’ expectations, who had anticipated a 0.6% monthly increase and a 3.6% yearly increase.
In Canada, the ratio of household debt to income slightly decreased to 180.0% in the second quarter, down from a revised figure of 180.2% in the first quarter, as reported by Statistics Canada on Wednesday. Additionally, national net worth increased by 1.8% in the first quarter, reaching C$17.36 trillion ($12.79 trillion), with national net worth per capita rising to C$432,472.
In corporate news, Dollarama raised its annual sales forecast after exceeding quarterly sales expectations. The discount retailer saw increased demand as Canadians turned to its affordable products in response to rising prices for essential items. Dollarama also adjusted prices on some of its products to mitigate the impact of higher logistics and labor costs caused by ongoing supply chain disruptions in Canada. Citigroup’s CEO, Jane Fraser, announced a corporate restructuring on Wednesday, following a decline in the company’s stock value. This restructuring involves dividing Citigroup into five main divisions and eliminating the two main divisions that previously served consumers and large institutional clients.
