Everything You Need to Know on Friday: Big Six Banks See at Least 2 More Canada Rate Cuts in 2024

Good morning mooers! Here are things you need to know about today's market:

● S&P/TSX 60 Index Standard Futures are trading at 1,326.00, down 0.23%

● Big 6 banks see at least 2 more Canada rate cuts in 2024

● Statistics Canada to release May jobs report this morning

● Bank of Canada cut starts to nudge mortgage rates down

● Stocks to watch: Saputo

Today, the Canadian dollar is trading at 73.15 cents US, a slight increase from Thursday.

S&P/TSX 60 Index Standard Futures are trading at 1,326.00, down 0.23% from previous close.

The Bank of Canada has pivoted to easier monetary policy, but economists are split on how many more cuts to expect this year.

Officials trimmed borrowing costs by a quarter of a percentage point this week to 4.75 per cent. Governor Tiff Macklem said more cuts are likely if inflation progress continues, but he’ll take decisions “one meeting at a time.” That suggests policymakers aren’t on a set path for easing and will instead be data dependent.

There’s no predetermined course when one looks at economists’ forecasts, which are swayed not only by analysts’ views of Canada’s disinflation and growth, but also their perspective on how far the Bank of Canada can keep easing ahead of the U.S. Federal Reserve.

Traders in overnight swaps put the odds of another cut in July at less than two-thirds, with two full cuts priced by the bank’s December meeting, which would bring the benchmark overnight rate to 4.25 per cent. They expect the rate to reach 3.75 per cent by July 2025.

Statistics Canada is set to release its May labour force survey this morning.

RBC expects the unemployment rate ticked up to 6.2 per cent and the economy added a modest 15,000 jobs last month.

The report is the first major data release following the Bank of Canada's interest rate cut on Wednesday.

The Canadian job market has softened over the last year as high interest rates weigh on businesses.

The unemployment rate was 6.1 per cent in April, a full percentage point higher than it was a year ago.

The job market is expected to remain weak in the coming months, even as the Bank of Canada continues to lower interest rates.

The big rate headline of the week comes courtesy of the Bank of Canada. Its quarter-point drop on Wednesday was the first cut since the toilet paper stockpiling days of March 2020.

The drop is nudging down variable mortgage and credit line rates. Depending on one’s loan type, rate and amortization, most floating-rate borrowers are seeing anywhere from $12 to $21 decreases in monthly payments or interest costs, per $100,000 of balance.

The newfound rate-driven affordability — and try not to snicker at the word “affordability” — should spark more home buying. In fact, it may turn expectations into a self-fulfilling prophecy that supports home prices.

That said, with a weakening economy, it’ll take further rate reductions to keep fulfilling the “prophecy.”

On the rate front, insured and uninsured variable rates have dipped 19 and 25 bps respectively this week at national lenders.

Insured variables are now as low as 5.65 per cent at nesto. Uninsured variables may require another BoC rate chop before sliding under 6 per cent.

The Montreal-based dairy processor says revenues for the quarter ended March 31 were $4.55 billion, up slightly from $4.47 billion during the same quarter last year.

Diluted earnings per share were 22 cents, down from 38 cents a year earlier.

President and CEO Lino Saputo says the company stayed its course amid commodity price volatility, a challenged consumer and ongoing inflationary pressures.

He says Saputo is ramping up commercial production at several facilities after completing most of the major capital projects in the firm's strategic plan.

Earlier this year, the company announced that chief executive Saputo will transition to the role of executive chair of the board effective Aug. 9.