Lack of detention space could force CBSA to release detainees, internal memo warns
The Canada Border Services Agency is scrambling to find space to hold high-risk detainees that are set to be transferred from provincial jails in June.
North American stock markets swung lower midweek after the Federal Reserve revised its inflation outlook upwards and moved forward the timing of planned interest rate hikes.
The U.S. central bank announced Wednesday that the first rate hikes would be in 2023, after signalling in March that there would be no increases until at least 2024.
A majority of bank members also said there could be at least two quarter-point increases in 2023.
Stock markets dropped after the statement was issued at 2 p.m., but the TSX bounced back before ending the day slightly below water.
The S&P/TSX composite index closed down less than a point to 20,230.96 after reaching an intraday record of 20,295.18.
The Toronto market reacted to the Fed statement but failed to be affected by an earlier Statistics Canada report that the consumer price index rose to 3.6 per cent in May, the largest yearly increase since May 2011.
In New York, the Dow Jones industrial average was down 265.66 points at 34,033.67. The S&P 500 index was down 22.89 points at 4,223.70 after posting an intraday record, while the Nasdaq composite was down 33.18 points at 14,039.68.
The U.S. Fed increased its outlook for inflation to 3.4 per cent this year, up from its prior forecast of 2.4 per cent. It expects GDP would grow seven per cent this year, up from 6.5 per cent. Unemployment would fall to 4.5 per cent in 2021, 3.8 per cent in 2022 and 3.5 per cent in 2023.
But it gave no signal about tapering its US$120 billion a month in bond purchases or that it viewed inflation as anything but temporary.
Pierre Cleroux, chief economist for the Business Development Bank of Canada, said the bank made no major changes to its outlook but markets reacted to it suggesting two rate hikes for the first time since the pandemic.
"They keep exactly the same strategy, but they are sending the signal that the U.S. economy is improving and as a result they are going to increase interest rates faster than expected," he said in an interview.
That's positive overall and a reason why Cleroux said he doesn't expect the market declines will be lasting.
"It's down now, but I think it's actually positive news and I think the next few days the market is going to be reassured by that."
The Fed statement offers a signal that the Bank of Canada will also increase rates because the economy is performing well.
However, Cleroux doesn't expect the Canadian central bank to accelerate its rate increases.
"They already announced that they will increase interest rates from summer 2022. They were actually a bit more aggressive than the Fed and that is the reason our dollar is higher, so I don't think that will change the Bank of Canada strategy."
The heavyweight financials sector climbed on news of two U.S. interest rate hikes and was the best performer on the TSX as Bank of Montreal, National Bank and Scotiabank shares rose 1.4, 1.3 and 0.9 per cent, respectively
Technology was also higher as shares of Shopify Inc. rose 3.6 per cent and offset a 7.4 per cent decline by BlackBerry Ltd.
Energy was the worst performer despite higher prices, losing 1.4 per cent as Cenovus Energy Inc. fell 2.3 per cent, MEG Energy Corp. was down two per cent and Canadian Natural Resources Ltd. was off 1.7 per cent.
The July crude oil contract was up three cents at US$72.15 per barrel and the July natural gas contract was up 1.1 cents at US$3.25 per mmBTU.
Prices continued to increase as demand moves up as U.S. restrictions are lifted while supply remains restricted.
The Canadian dollar traded for 82.03 cents US compared with 82.05 cents US on Tuesday.
Materials also dropped despite higher metals prices as Kinross Gold Corp. climbed 7.1 per cent.
The August gold contract was up US$5 at US$1,861.40 an ounce and the July copper contract was up 5.2 cents at nearly US$4.39 a pound.
This report by The Canadian Press was first published June 16, 2021.
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