The Daily Chase: Canadian inflation rate eases to 2.7%

Here are five things you need to know this morning:

Canadian inflation cools to 2.7%: Canada’s consumer price index decelerated in June to an annual rate of 2.7 per cent, Statistics Canada reported this morning. That’s down from 2.9 per cent the previous month, but in line with expectations. It marks the sixth month in a row that inflation has been below the upper bound of three per cent that the central bank likes to see, which, in a vacuum, is a sign the central bank should be more comfortable to ease lending rates a little. A slim majority of economists polled by Bloomberg expect the Bank of Canada to stand pat when it meets to decide on its next policy rate next week, but traders in overnight index swaps are a little more confident that a cut is coming. Current pricing implies a more than 90 per cent chance of a cut next week. Those odds increased by about 10 percentage points after the numbers came out.

Gold ratchets higher on rate cut bets: Canada isn’t the only place where investors are upping their bets of rate cuts to come. Traders are increasing their expectations for cuts in the U.S. this year. While a cut this month is still just a remote possibility, the swaps market is implying it’s a virtual certainty that we’ll see one in September. And instead of one or two, the market is now pricing in potentially a third cut from the U.S. Federal Reserve before the year is out. Among other assets, gold is rallying on that prospect, with bullion trading at US$2,433 an ounce on Tuesday morning. That’s within a whisker of the all time high of $2,450 it hit back in May. “Optimism about U.S. interest rate cuts as more economic data supports the case for a Fed pivot is supporting gold,” Ewa Manthey, a commodities strategist with ING, told Bloomberg.

$0.01 is the loneliest number: It’s not quite zero but the latest analyst estimates for Corus Entertainment are trending precariously close. After the company warned on Monday that it is in danger of breaching its debt covenants and doubts exist as to its ability to remain a going concern, Bay Street analysts are updating their price forecasts for the stock, and the trend is not an investor’s friend. The shares closed at 15.5 cents on Monday, which is more than three times higher than TD and Scotiabank’s target for the shares. Even bleaker is the forecast from National Bank analyst Adam Shine, who has a price target of one cent per share. “It’s hard for us to ascribe any remaining value for equity holders,” he said.

Match.com shares rise after another activist takes a stake: Investors are swiping right on shares in Match.com, the owner of numerous dating apps, after a third activist investor has taken a stake in the firm, pushing for changes in the company that has lost users for six quarters in a row. Starboard Value has built a 6.6 per cent stake in Match and says it plans to push for a sale of the company unless management can turn its operations around. Starboard joins Elliott and Anson Funds in seeking a seat at the table for the company whose shares are down 12 per cent this year and more than 70 per cent since its 2020 peak. Shares were up eight per cent, however, in premarket trading.

Toronto traffic reaching crisis level: What else can you say about Toronto traffic besides the obvious: it sucks. That’s the main takeaway from an eye-opening poll out this morning, commissioned by the Toronto Board of Trade and conducted by Ipsos, on sentiment surrounding traffic in the city. Among 1,000 people polled in June, 86 per cent of them said traffic in the city has reached a “crisis” point, with almost three-quarters saying the situation is so dire they’d be in favour of 24/7 construction to clear the backlog. Two thirds of respondents said traffic is a “serious problem” for their household and about the same number say they are reluctant to travel for work or commute into the office because of it. Data suggests weekday population density in the downtown core is still only about two-thirds of its pre-pandemic level, and traffic is a big reason why. As Giles Gherson, CEO of the Toronto Board of Trade, put it to Bloomberg: “Employees are saying: my commute has become intolerable.”