TORONTO (Reuters) – Investors, looking past the COVID-19 pandemic, are betting that the Bank of Canada could be among the first major central banks to hike interest rates, signaling new governor Tiff Macklem’s success so far convincing the market not to expect negative rates.
FILE PHOTO: A sign is pictured outside the Bank of Canada building in Ottawa, Ontario, Canada, May 23, 2017. REUTERS/Chris Wattie/File Photo
Money market data shows investors have moved away from pricing in additional easing by the Bank of Canada and instead see a steady profile for rates this year and next, with about a 50% chance of a rate hike in 2022. BOCWATCH.
The Federal Reserve, which has been pressured by U.S. President Donald Trump to cut rates below zero, is not expected by money markets to hike until at least 2023.
“The Bank of Canada has done a better job than some other central banks of quashing speculation around further rate cuts,” said Andrew Kelvin, chief Canada strategist at TD Securities.
“If you think that the economy did hit bottom in April, a rate hike in two years … is a plausible outcome I think,” Kelvin said.
After the Bank of Canada slashed interest rates in March to a record low of 0.25%, speculation mounted that it would join central banks in Japan and Europe in setting rates below zero.
Just last month, the Canadian dollar slumped as some investors mistook a comment by Macklem, on the day he was named the governor, as putting negative rates on the table.
Sub-zero rates lower borrowing costs and could help exporters if the Canadian dollar were to decline, but they also hurt lending margins for banks and penalize savers.
Some economists argue the experience of Europe and Japan shows that negative rates are not effective at boosting economic growth. Alternatives for the Bank of Canada if it needs to add stimulus include adding to the size of its bond-buying program.
Both Macklem and his predecessor Stephen Poloz have said they see 0.25% as the floor for rates. That could have headed off some potential headaches.
If negative rates “were to get priced in and the BoC didn’t meet the market expectation, then the BoC would be disappointing markets,” said Greg Anderson, global head of FX strategy at BMO Capital Markets. It “would likely trigger an equity decline and CAD rally at a really bad moment.”
Money markets could also be signaling confidence that adequate fiscal and monetary policy stimulus has been put in place to help Canada’s economy recover, said TD’s Kelvin, adding that the BoC will not want to encourage excessive borrowing from already heavily-indebted Canadians.
“I wouldn’t be surprised if the Bank of Canada was a little bit more eager (than other central banks) to move out of emergency rates when they are able to,” Kelvin said.
Reporting by Fergal Smith; Editing by Denny Thomas and Tom Brown
CALGARY – TC Energy Corp. has lowered the estimated cost of its Southeast Gateway pipeline project in Mexico.
It says it now expects the project to cost between US$3.9 billion and US$4.1 billion compared with its original estimate of US$4.5 billion.
The change came as the company reported a third-quarter profit attributable to common shareholders of C$1.46 billion or $1.40 per share compared with a loss of C$197 million or 19 cents per share in the same quarter last year.
Revenue for the quarter ended Sept. 30 totalled C$4.08 billion, up from C$3.94 billion in the third quarter of 2023.
TC Energy says its comparable earnings for its latest quarter amounted to C$1.03 per share compared with C$1.00 per share a year earlier.
The average analyst estimate had been for a profit of 95 cents per share, according to LSEG Data & Analytics.
This report by The Canadian Press was first published Nov. 7, 2024.
BCE Inc. reported a loss in its latest quarter as it recorded $2.11 billion in asset impairment charges, mainly related to Bell Media’s TV and radio properties.
The company says its net loss attributable to common shareholders amounted to $1.24 billion or $1.36 per share for the quarter ended Sept. 30 compared with a profit of $640 million or 70 cents per share a year earlier.
On an adjusted basis, BCE says it earned 75 cents per share in its latest quarter compared with an adjusted profit of 81 cents per share in the same quarter last year.
“Bell’s results for the third quarter demonstrate that we are disciplined in our pursuit of profitable growth in an intensely competitive environment,” BCE chief executive Mirko Bibic said in a statement.
“Our focus this quarter, and throughout 2024, has been to attract higher-margin subscribers and reduce costs to help offset short-term revenue impacts from sustained competitive pricing pressures, slow economic growth and a media advertising market that is in transition.”
Operating revenue for the quarter totalled $5.97 billion, down from $6.08 billion in its third quarter of 2023.
BCE also said it now expects its revenue for 2024 to fall about 1.5 per cent compared with earlier guidance for an increase of zero to four per cent.
The company says the change comes as it faces lower-than-anticipated wireless product revenue and sustained pressure on wireless prices.
BCE added 33,111 net postpaid mobile phone subscribers, down 76.8 per cent from the same period last year, which was the company’s second-best performance on the metric since 2010.
It says the drop was driven by higher customer churn — a measure of subscribers who cancelled their service — amid greater competitive activity and promotional offer intensity. BCE’s monthly churn rate for the category was 1.28 per cent, up from 1.1 per cent during its previous third quarter.
The company also saw 11.6 per cent fewer gross subscriber activations “due to more targeted promotional offers and mobile device discounting compared to last year.”
Bell’s wireless mobile phone average revenue per user was $58.26, down 3.4 per cent from $60.28 in the third quarter of the prior year.
This report by The Canadian Press was first published Nov. 7, 2024.
TORONTO – Canada Goose Holdings Inc. trimmed its financial guidance as it reported its second-quarter revenue fell compared with a year ago.
The luxury clothing company says revenue for the quarter ended Sept. 29 totalled $267.8 million, down from $281.1 million in the same quarter last year.
Net income attributable to shareholders amounted to $5.4 million or six cents per diluted share, up from $3.9 million or four cents per diluted share a year earlier.
On an adjusted basis, Canada Goose says it earned five cents per diluted share in its latest quarter compared with an adjusted profit of 16 cents per diluted share a year earlier.
In its outlook, Canada Goose says it now expects total revenue for its full financial year to show a low-single-digit percentage decrease to low-single-digit percentage increase compared with earlier guidance for a low-single-digit increase.
It also says it now expects its adjusted net income per diluted share to show a mid-single-digit percentage increase compared with earlier guidance for a percentage increase in the mid-teens.
This report by The Canadian Press was first published Nov. 7, 2024.