1. All Eyes on the Bank of Canada
Today’s Bank of Canada interest rate decision is the big event.
A hold is very likely.
However, the press conference and statement should provide more insight into how the Bank of Canada is thinking.
The Bank has a lot of problems to deal with, and many of them are policy-related and outside of its control.
2. Another Inflation Surprise
We got U.S. PPI this morning, and just like CPI, it came in lower than expected.
But now, with war back on and oil prices moving higher again, does inflation continue to cool?
The bond market thinks there’s some cooling, but nothing significant.
Yields remain relatively high.
There was no material change in bond yields yesterday or today following the PPI report.
Also, if you’re looking at the probability of a Federal Reserve rate hike in September, it’s essentially a toss-up at this point.
3. Gold Is Still Stuck in a Range
Gold and silver spiked on the CPI news, but throughout the day they couldn’t hold onto those gains. The clearest reason was bond yields and the U.S. dollar coming off their lows.
For gold, $4,000 continues to look like a very strong level… at least for now.
On the upside, it needs to consistently close above $4,100, and then $4,200, to bring some relief and attract buyers.
At the current state, it’s still choppy.
Something is happening in copper (bullish). It’s worth watching.
4. Oil Is Back Above $80
Oil is back above $80.
So far, it sounds like the proposed 20% U.S. tariff is off the table.
It’s truly becoming a circus from the U.S. side.
The amount of noise and tweets isn’t healthy for the markets.
5. Don’t Ignore the Bigger Risks
There continues to be too much complacency around data centers and the AI rollout.
Keep in mind that earnings season has begun, and that means stock-specific risk goes up.
The Japanese yen and bond yields shouldn’t be overlooked.
Bitcoin is back above $65,000 and its 50-day moving average. Watch for a potential move higher. But what’s the narrative?