Independent Accountants' Investment Counsel Inc.

(source: Bloomberg, MSCI and ARG Inc. analysis)


What happened last week?

  • All equity markets in our grid lost ground last week.  Although the TSX and the Canadian dollar may not be as tightly corelated to the price of oil as they were years ago, all three experienced a decline.  The TSX lost 2½% while the U.S. equity indices performed only slightly better, losing 1½ to 2%.

  • The most important domestic economic news was the Consumer Price Index (CPI).  Canada’s inflation rate has risen to 5.1% year-over-year; the highest rate in 30 years.  The continuation of heightened inflation here and in the U.S. extends the pressure on the Bank of Canada to raise interest rates, which could come as early as their next meeting on March 2nd.

  • Canadian inflation is well below the U.S. rate, which is 7.5%. The pressure on the Federal Reserve to adjust short term interest rates higher appears to be even more intense.  Predictions that the Fed will act strongly in early 2022 before slowing interest rate rises later in the year seem more likely as inflation continues to rise.  The nature of inflation, which is less tied to supply-chain issues than originally contemplated by the Fed, could make a ½ point increase to the Federal Funds rate as likely as ¼ point increase. 

  • Ahead of any interest rate manoeuvres by central banks, equity markets appear to be pricing in the eventual increase. The drop in equities indices last week could be perceived as confirmation that the Fed and Bank of Canada are poised to raise rates.  The Fed’s Open Market Committee meets on March 15th and 16th and may have their monetary policy intentions signalled two weeks in advance by the Bank of Canada.

What’s ahead for this week?

  • In Canada, markets are closed on Monday for several provincial holidays.  In Ontario, the Family Day observance closes the TSX.  January’s wholesale trade and manufacturing sales will be released.

  • In the U.S., capital markets and banks are also closed on Monday.  Durable goods orders, new home sales, pending home sales, Case-Shiller and FHFA home Price Indexes, and personal spending will be released along with Purchasing Managers Index (PMI) from Markit.

  • Globally, PMI for several areas, including the Eurozone and Japan will be announced.  Germany’s business climate and consumer confidence, and the Eurozone’s economic and consumer confidence, and consumer inflation will be announced.

For more information contact: [email protected] | Tel (519) 291-2817 | 135 Main Street, East | PO Box 68 | Listowel, ON N4W 3H2


This report is produced by Independent Accountants' Investment Counsel Inc (“IAIC”) in conjunction with ARG Inc.  All graph and chart statistical data contained in this report has been supplied by ARG Inc. The views and opinions expressed in this report are based on market statistics.  No guarantee of outcome is implied, and opinions may change without notice.  Investors should not base any of their investment decisions solely on this report nor should any opinions expressed within this report be construed as a solicitation or offer to buy or sell any securities mentioned herein.  Although the information contained in this report has been obtained from sources that IAIC believes to be reliable, we do not guarantee its accuracy, and as such, the information may be incomplete or condensed. All opinions, estimates and other information included in this report constitute our judgment as of the date hereof and are subject to change without notice.

Please contact your IAIC representative if you have any questions regarding this report. 


©Copyright 2022 Independent Accountants’ Investment Counsel Inc. All rights reserved.


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