Group 1 - The U.S. Supreme Court ruled that President Donald Trump's large-scale global tariffs are invalid, leading to a rise in European stock indices, with the Stoxx 600 index initially increasing by 1.1% and closing up by 0.8% [1][4] - Luxury goods manufacturers sensitive to tariffs, such as LVMH and Hermès International, outperformed the market following the ruling [1][4] - The ruling represents a significant legal defeat for Trump, undermining his signature economic policy, although the Supreme Court did not decide on the extent to which importers are entitled to refunds, leaving that to lower courts [1][4] Group 2 - European benchmark stock indices were boosted by stronger-than-expected Eurozone business activity, attributed to unexpected growth in the German economy [5] - The U.S. economy's growth in the last quarter of 2025 was below expectations, prompting investor reassessment [5] - The core inflation indicator favored by the Federal Reserve recorded its largest increase in nearly a year in December [5] Group 3 - The earnings season overall performed better than expected, with MSCI European companies reporting a 3.7% profit growth in the fourth quarter, surpassing analysts' expectations of 1.3% [3][7]

Core Insights - Canada's inflation accelerated to 2.4% in December, exceeding market expectations of 2.2% as reported by Bloomberg [1][3] - The increase in overall inflation is primarily attributed to a base effect from temporary federal tax exemptions on various goods in December 2024, which offset the decline in gasoline prices [1][4] Inflation Data Summary - The Consumer Price Index (CPI) decreased by 0.2% month-over-month, falling short of the expected 0.3% decline [2][4] - Core inflation indicators, which exclude volatile items, showed a slowdown, with the trimmed and median measures' year-over-year growth decreasing from 2.9% to 2.6% [2][4] - On a three-month moving annualized basis, these core indicators dropped from 2.3% in November to 1.7% [2][4] Market Reaction - The data had a minimal impact on interest rate expectations, with economists indicating that the report did not alter their views on the Bank of Canada's stance [2][4] - The Canadian dollar reacted mildly to the inflation data, while bond markets strengthened, with the two-year benchmark government bond yield falling to 2.536% [2][4]

Group 1 - The core inflation rate in Canada has shown a cooling trend for the third consecutive month, which is likely to reassure the Bank of Canada [1] - The Consumer Price Index (CPI) in December increased by 2.4%, higher than expected, primarily due to the base effect from last year's sales tax relief policy [1] - The Bank of Canada maintained its key policy interest rate at 2.25% in December, indicating that this rate is appropriate to bring inflation close to its 2% target [1] Group 2 - The money market anticipates that interest rates will remain unchanged until 2026 [1]

Group 1 - The core inflation indicator aligns with the 2% target, but the inflation outlook is more uncertain than before, with a stronger euro potentially further reducing inflation [1] - Wage growth is expected to slow down in the first half of 2026 according to wage tracking indicators [1] - Some downside risks to economic growth have eased, with the US trade agreement and ceasefire helping to mitigate these risks; however, the global trade policy environment remains unstable [1]

Core Viewpoint - The upcoming Federal Reserve meeting is under unprecedented pressure due to political tensions, changing trade policies, and conflicting economic signals, with significant data releases on GDP and employment expected to influence policy direction [1] Economic Data Summary - The U.S. GDP annualized growth rate for Q2 is projected to reach 2.4%, a significant improvement from the contraction of 0.5% in Q1, primarily driven by a sharp reduction in the trade deficit [1] - The July non-farm payroll report is anticipated to show a cautious hiring trend among businesses, with new job additions expected to slow down following a surge in the education sector in June, and the unemployment rate may slightly rise to 4.2% [1] - The June personal income and spending report is expected to indicate a slight acceleration in the core inflation metric favored by the Federal Reserve, suggesting that tariffs are gradually being passed on to consumers [1]

Core Insights - Canada's overall CPI decreased to 1.7% in April from 2.3% in March, primarily due to a 12.7% drop in overall energy prices following the removal of the federal consumer carbon tax [1] - However, two of the three core inflation indicators closely monitored by the Bank of Canada reached a 13-month high, indicating potential price pressures [1] - The Bank of Canada had previously forecasted that overall inflation data would drop to around 1.5% due to the removal of the carbon tax and falling crude oil prices [1] Inflation Details - Gasoline prices fell by 18.1% year-over-year in April, while natural gas prices decreased by 14.1% [1] - Consumer spending on grocery items increased by 3.8% compared to the same period last year, up from 3.2% in March [1] - Travel prices rose by 6.7% year-over-year in April [1] - Month-over-month, the inflation rate decreased by 0.1%, slightly better than analysts' predictions of a 0.2% decline [1]