Daily Pulse

One of our most accessible tools, this daily comment keeps you abreast of developments on the North American and international financial markets.

Michel Doucet

Michel Doucet
Vice-President and
Portfolio Manager

June 30, 2022


One of Canada’s biggest credit unions is warning against deeper spending cuts from Prime Minister Justin Trudeau’s government to wrestle down inflation, saying the economy is poised to slow sharply. Desjardins Securities Inc. entered the debate on how fiscal policy should look amid soaring inflation Wednesday, saying in a report to investors that the government should continue on its current fiscal path. “We’re of the view that the federal government should stay the course,” Randall Bartlett, senior director of Canadian economics at Desjardins, said in the report. “It should follow its current plans to gradually lower spending and let the Bank of Canada do its job on the front lines of the fight against inflation.” Much of the direct transfers to households have already been pulled back, Bartlett said, adding that much of the residual transfers have been negotiated to provincial governments or include “measures to mitigate the eroding purchasing power of vulnerable households,” which are “welcome.” Bartlett also noted that elevated spending in the provinces is forecast to fall more slowly and could represent a better way to reduce fiscal stimulus.

United States

US personal spending expanded in the first quarter at the weakest pace of the pandemic recovery, marking a surprise sharp downward revision that suggests an economy on weaker footing than previously thought. Outlays on goods and services rose an annualized 1.8%, compared with a 3.1% pace in the previous estimate, according to Commerce Department data out Wednesday. Overall gross domestic product was revised down slightly to a 1.6% annualized decline in the first quarter. Spending on both services and merchandise was revised lower. Within services, outlays for financial services, insurance and health care were marked down. Spending on goods was revised to an annualized 0.3% decline from little changed, reflecting less robust spending on durables. “This is a case where GDP revisions alters the view of the first quarter,” said Alex Pelle, US economist at Mizuho Financial Group Inc. “Instead of accelerating in the first quarter versus the prior two quarters, consumption actually moderated.”


European gas is heading for the biggest monthly gain since September as Russia’s supply cuts put companies under stress and force governments to confront the prospect of major shortages. Benchmark futures rose as much as 4.7% on Thursday, taking the increase in June to more than 50%. Moscow’s deep cuts earlier this month have rapidly tightened the market, overshadowing reduced summer demand and strong imports of liquefied natural gas. Countries are prioritizing refilling of storage in time for winter to avoid blackouts. The impact of the cuts is spreading through the economy, crimping growth and hitting operations of companies.

French inflation hit a fresh record in June, accelerating to 6.5% from 5.8%. UK home prices gained 10.7% year on year, slowing from 11.2%, Nationwide said. The economy grew 0.8% last quarter.


Chinese equities are once again in vogue, after months of regulatory crackdowns, deleveraging and stringent virus curbs wiped trillions of dollars off benchmark gauges. A Bloomberg survey of 19 fund managers and analysts predicts that benchmark stock indexes in China and Hong Kong will post gains of at least 4% by year-end to outperform their global peers. About 70% of those polled plan to maintain or boost holdings of shares in the mainland and the financial hub in the next three months. A recent easing of virus restrictions has propelled the CSI 300 Index to the brink of a bull market, and a loose policy stance has helped local equities defy the recent selloff in global stocks.

Oil is heading for the first monthly decline since November as OPEC+ ministers prepare to discuss its supply policy, with the group expected to rubber-stamp an output boost of 648,000 barrels a day for August, completing the reversal of vast cuts made in early 2020. Traders are also looking for signs Saudi Arabia may be willing to crank up its taps even more in the future, especially as Joe Biden prepares to visit Riyadh next month. Whether that's enough to take the sting out of inflation -- which has now spread to wage costs and the services sector -- remains doubtful.

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