Two Federal Reserve officials offered mixed views on whether the oil price shock could be considered transitory, with Michelle Bowman in favor of looking through such developments and Jeffrey Schmid saying inflation is too hot to ignore.
Federal Reserve officials continued on Friday to signal the U.S. central bank may need to raise interest rates in the future if the war in the Middle East leads to a persistent increase in already-high inflation. The potential shift in the monetary policy outlook has even been embraced by Fed Vice Chair for Supervision Michelle Bowman, one of the central bank's most dovish policymakers.
Fed Vice Chair for Supervision Michelle Bowman said that more clarity is needed on the situation in the Middle East before overreacting to a what could be a one-time spike in energy prices.
Advance data for April showed the international trade deficit narrowed to $82.4 billion from $85.27 billion in March, reflecting a large increase in exports offset by a smaller increase in imports. In the same report, wholesale inventories rose by 0.5% in April after a 1.5% gain in March, while retail inventories increased by 0.7% after a 0.7% gain.
According to Avery Shenfeld, the "surprisingly" weak Q1 GDP readings today actually explained more about why the jobs numbers this year have been "so ugly", rather than necessarily implying we're due for more of the same in May. CIBC sees a net addition of 15K to the ranks of the employed next Friday, compared to a consensus 10k gain, and Shenfled said this might only be enough to hold the unem...
Federal Reserve officials continued on Friday to signal the U.S. central bank may need to raise interest rates in the future if the war in the Middle East leads to a persistent increase in already-high inflation. The potential shift in the monetary policy outlook has even been embraced by Fed Vice Chair for Supervision Michelle Bowman, one of the central bank's most dovish policymakers.
* Loonie weakens 0.1% against the U.S. dollar. * GDP falls 0.1% annualized in first quarter. * Price of oil decreases 1.6% * Bond yields ease across steeper curve. By Fergal Smith.
* U.S. and Iran have agreed to extend ceasefire, sources say. * Canada's Q1 GDP contracts in the first quarter. By Niket Nishant. Canada's main stock index climbed on Friday and was on course for its second consecutive month of gains, as renewed hopes for a Middle East peace deal buoyed investor sentiment.
National Bank of Canada on Friday removed Tamarack Valley Energy (TNEYF) from restriction, raising its price target to C$16.50 from $15 with an outperform rating. The target price increase reflects the high-graded fundamentals of the business, specifically lower sustaining capital and higher associated free cash flow, the bank said.
Federal Reserve Vice Chair for Supervision Michelle Bowman said Friday that she believes price growth is still heading toward the central bank's 2% target when factoring out one-time shocks such as tariffs and elevated oil prices.
* BANK OF CANADA TO AUCTION C$5 BILLION OF 2-DAY FUNGIBLE CASH MANAGEMENT BILLS ON JUNE 1, FINAL CALL FOR TENDERS SHOWS. * BANK OF CANADA TO AUCTION C$3 BILLION OF 4-DAY NON-FUNGIBLE CASH MANAGEMENT BILLS ON JUNE 1, FINAL CALL FOR TENDERS SHOWS. Source text: Further company coverage: [ ]
On Friday, Laurentian Bank of Canada (LRCDF) discussed second-quarter financial results during its earnings call. This content is powered by Benzinga APIs. Access the full call at https://app.webinar.net/qWnJVW4ND3B LandBridge Co LLC reported a 12% increase in total revenue year-over-year, reaching $213.7 million this quarter.
Federal Reserve Vice Chair for Supervision Michelle Bowman said Friday that she is looking for more clarity on the Middle East conflict before determining the monetary policy path forward, noting the risks of overreaction to temporary factors.
Federal Reserve Bank of Philadelphia President Anna Paulson said Friday "mildly restrictive" monetary policy is "well positioned" for an uncertain outlook where inflation pressures remain too high.
Canada's main stock index opened slightly higher on Friday amid reports that a deal has been reached to extend the U.S.-Iran ceasefire, even as gains were kept in check by data that showed Canada's economy contracted on an annualized basis in the first quarter. At 9:30 a.m. ET, the Toronto Stock Exchange's S&P/TSX Composite Index was up 0.12% at 34,557.46 points.
Canada's economy "remained ice cold" throughout the early days of 2026, says Royce Mendes over at Desjardins, but even though the early economic results for 2026 "aren't encouraging" the Bank of Canada may be hesitant to put cuts back on the table, he adds. Mendes noted Friday's economic data showed quarterly GDP declined 0.1% in Q1, in sharp contrast to expectations for 1.5% growth.
Federal Reserve Vice Chair for Supervision Michelle Bowman said on Friday the Middle East war's impact on the economy, while still being measured, could lead to persistent rises in inflation that might require tighter monetary policy.
The Canadian economy continued to struggle in Q1 as gross domestic product posted another decline, said CIBC after Friday's GDP data. The 0.1% annualized drop was in stark contrast with the consensus for a rebound to 1.5%, noted the bank.
Canadian real gross domestic product edged down 0.1% month over month in March, partially offsetting February's increase of 0.2% and driven by contractions in goods-producing industries, said the country's statistical agency on Friday. March's contraction was worse than a 0.1% month-over-month consensus expansion provided by MUFG.
The U.S. trade deficit in goods contracted more than expected in April as a surge in exports blunted rising imports, but economists cautioned the trend was unlikely to be sustainable, with businesses ramping up investment in artificial intelligence.
* First quarter GDP contracts 0.1% on an annualized basis. * Q1 decline follows 1% contraction in Q4 on annual basis. * GDP was flat in Q1 on a quarterly basis, StatsCan said. * Advance estimate showed growth in April likely at 0.4% By Promit Mukherjee.
The U.S. trade deficit in goods contracted in April as a surge in exports more than offset rising imports, a trend that if sustained could see trade contributing to economic growth in the second quarter. The goods trade gap narrowed 3.4% to $82.4 billion last month, the Commerce Department's Census Bureau said on Friday. Goods exports increased $8.5 billion to $219.7 billion.
* EU considers new trade tools, supply chain diversification rules. * China says EU cites selective data in trade imbalance claims. * EU tougher stance will need to bridge Franco-German divide. By Julia Payne.
Brazil's gross domestic product grew 1.1% in the first quarter from the previous three months, official data showed on Friday, compared with 1.0% growth forecast in a Reuters poll. On an annual basis, Latin America's largest economy expanded 1.8%, statistics agency IBGE said, matching market expectations.
The Canadian gross domestic product report for Q1 is the key release of Friday, at 8:30 a.m. ET, said Bank of Montreal. The bank notes that the Canadian economy seemed to regain its footing at the start of the year. Swings in trade -- like that in March -- can drive larger-than-normal differences between measures of GDP by industry and by expenditure, stated BMO.
Brazil's public sector gross debt rose to 80.4% of gross domestic product in April, from 80.0% the month before, central bank data showed on Friday. The public sector recorded a primary surplus of 24.624 billion reais for the month, beating the 22.0 billion reais forecast in a Reuters poll of economists.
Federal Reserve Bank of Kansas City President Jeffrey Schmid said the current arc of inflationary pressures means that the central bank may need to weigh tightening the overall stance of monetary policy.
Futures tracking Canada's blue-chip stocks rose on Friday as a deal to extend the U.S.-Iran ceasefire renewed hopes for an end to the Middle East conflict, while investors also awaited domestic GDP data due to be released later in the day.
Federal Reserve Bank of Kansas City President Jeffrey Schmid said on Friday that already-hot levels of inflation make it harder to assume the current energy shock will have only a temporary impact on pricing and can be ignored by the central bank.
Investors will turn to an important labor market update next week as they weigh whether simmering inflation and the potential for interest rate hikes could derail the rally in U.S. stocks. Broadcom's (AVGO) results also pose a test in the coming week for the red-hot AI trade.
Some people inside and outside the Federal Reserve agree that rule changes easing how much cash banks need to keep on hand for emergencies could allow the central bank to further cut the size of its $6.7 trillion balance sheet but also harbor doubts holdings could be slashed by the degree new Chairman Kevin Warsh desires.
* Sterling dips, remains within recent range. * BoE's Bailey said allowing inflation overshoot is justified. * Markets still expect BoE rate hike this year. By Samuel Indyk.
Societe Generale in its early Friday economic news summary pointed out: -- Brent tumbles to a six-week low of US$92.4/barrel, off 27% from April peak, support US$91/US$90/US$86/barrel. -- Japan: Tokyo May consumer price index slows to 1.4% year over year, below forecast. -- France HICP up to 2.8% year over year in May from 2.5% in April, below forecast. -- Day ahead: Germany HICP.
Americans saved less money in April as consumer spending increased and inflation remained elevated, according to data released Thursday by the U.S. Bureau of Economic Analysis. The personal saving rate fell to 2.6% in April, while personal consumption expenditures increased by $111.1 billion, or 0.5%. Disposable personal income declined by $19.9 billion, or 0.1%, during the month.
* May nonfarm payrolls report due on June 5. * Job growth of 96,000 expected as investors wary of hot number. * Broadcom (AVGO) results pose test for AI trade, soaring semi shares. By Lewis Krauskopf. Investors will turn to an important labor market update next week as they weigh whether simmering inflation and the potential for interest rate hikes could derail the rally in U.S. stocks.
Greece's jobless rate stood at 9.5% in April, down from an upwardly revised 10.4% in March, data from statistics service ELSTAT showed on Friday. Seasonally adjusted data showed 452,305 people were officially unemployed. Unemployment impacted women more than men, at the rates of 13.7% and 5.9%, respectively.
The European Central Bank said on Friday it had picked Roland Straub, a former adviser to current President Christine Lagarde and her predecessor Mario Draghi, to lead its monetary policy work. Straub, who recently took over as the second in command at the ECB's market operations, will replace another close Draghi aide, Massimo Rostagno, who recently retired.
* Sees 2026 exports growing at fastest pace in 5 decades. * Taiwan cbank seen leaving interest rate steady this year -analyst. By Faith Hung and Jeanny Kao. Taiwan's tech-driven economy is expected to grow at its fastest pace in 16 years in 2026, the government statistics agency said on Friday, thanks to booming demand for artificial intelligence-related technologies.
The Iran war rocked global bond markets again in May, sending yields to multi-decade highs as traders priced in central bank rate hikes - only for signs of progress in peace talks and weak economic data to bring them sharply lower again.
* This time round consumers were quick to react to price changes. * Could make them more reluctant to spend and add to pressure on economy. * ECB is all but certain to raise rates at next meeting.
In general the bond market is volatile, and fixed income securities carry interest rate risk. (As interest rates rise, bond prices usually fall, and vice versa. This effect is usually more pronounced for longer-term securities.) Fixed income securities also carry inflation risk and credit and default risks for both issuers and counterparties. Unlike individual bonds, most bond funds do not have a maturity date, so avoiding losses caused by price volatility by holding them until maturity is not possible.
Lower-quality debt securities generally offer higher yields, but also involve greater risk of default or price changes due to potential changes in the credit quality of the issuer. Any fixed income security sold or redeemed prior to maturity may be subject to loss.
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