Senate expenses climbed to $7.2 million in 2023, up nearly 30%
Senators in Canada claimed $7.2 million in expenses in 2023, a nearly 30 per cent increase over the previous year.
Canada's main stock index edged higher Monday on a light trading day as investors awaited critical new U.S. inflation data expected later this week.
The S&P/TSX composite index was up 49.04 points at 19,669.17.
In New York, the Dow Jones industrial average was up 29.07 points at 32,832.54. The S&P 500 index was down 5.13 points at 4,140.06, while the Nasdaq composite was down 13.10 points at 12,644.46.
Inflation, and how far central banks are willing to go to tame it, is still the biggest story influencing financial markets this year. For that reason, Monday was a relatively quiet day in advance of the highly anticipated U.S. Consumer Price Index (CPI) data report, which is expected to be released Wednesday and will show how much inflation rose in the U.S. for the month of July.
Mona Mahajan, senior investment manager with Edward Jones, said she expects the report will show a slight bump in the U.S. core inflation reading, from 5.9 per cent in June to a possible 6.1 per cent for July. Any number that comes in ahead of that would provide potential rationale for the U.S. Federal Reserve to keep up a heightened pace of interest rate increases, while a lower number might soothe markets by indicating that inflation has already peaked.
“I think after this nice rally we've seen in U.S. and Canadian markets, any hint of a disappointing CPI report may be a catalyst to the downside,” Mahajan said. “But on the other end, if we get a nice move downward, it may extend the rally further.”
This week's U.S. inflation data will be coming on the heels of what was a surprisingly hot U.S. jobs report released last week. While Canada actually lost 31,000 jobs in July, the U.S. added 528,000 jobs in the month, more than double the 250,000 economists had expected.
The rapid pace of job growth south of the border is the reason a majority of analysts now expect the U.S. Federal Reserve will announce a 75-basis-point interest rate increase at its September meeting, Mahajan said, likely followed by two additional 25-basis-point increases thereafter.
She said markets no longer expect to see any potential reduction in interest rates until mid-next year, at least.
Commodity prices got a bit of stability Monday after last week's downward slide. In Canada, the mining sector got a boost from higher gold and copper prices as well as strong second-quarter earnings from Toronto-based Barrick Gold Corp, which saw its profits for the quarter surge almost 20 per cent since last year.
The December gold contract was up $14 at US$1,805.20 an ounce and the September copper contract was up three cents at US$3.59 a pound.
The September crude contract was up $1.75 cents at US$90.76 per barrel, after falling last week to below $90 per barrel for the first time since the Russian invasion of Ukraine in February.
The September natural gas contract was down 48 cents at US$7.59.
Second-quarter earnings continue to roll in this week both north and south of the border. So far, the earnings season has been better than many analysts expected, an indication that inflation hasn't yet had a significant impact on company profits.
But Mahajan pointed out that second-quarter earnings reports are a lagging indicator that don't reflect the full impact of recent central bank hikes.
“Keep in mind that earnings are backward-looking,” Mahajan said. “In Q2, we hadn't really gotten any real quantitative tightening in play yet, and we still saw a bit of softening (in profits) across the board. So we think while earnings have generally held up well, we could see further softening ahead given that lag time impact.”
The Canadian dollar traded for 77.78 cents US compared with 77.32 cents US on Friday.
This report by The Canadian Press was first published Aug. 8, 2022.
Senators in Canada claimed $7.2 million in expenses in 2023, a nearly 30 per cent increase over the previous year.
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