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UBS Still Sees Bank of Canada on Hold This Year Despite Higher Inflation Forecasts

-- Despite marking up its inflation projections and keeping topline economic growth unchanged, UBS said it continues to expect the Bank of Canada to remain on hold this year.

The latest signaling from the BoC is consistent with a cautious approach to changes in the policy rate in either direction, wrote the bank in a note to clients.

The Summary of Deliberations from the March policy meeting was consistent with a cautious approach, pointed out UBS.

Softer growth and a starting point of uncertainty already weighing on business and consumer confidence leave a dilemma for the BoC, stated the bank. The signaling at the March meeting suggested that the BoC would look through the immediate impact of higher energy costs on inflation but would be watching for signs of price pressures broadening when considering the appropriate policy stance.

The Summary of Deliberations acknowledged the soft starting point for the economy: "The war in Iran had clearly added a new layer of uncertainty, but they agreed that they should not lose sight of the other risks already facing the economy: shifting US trade policy, the upcoming review of the Canada-United States-Mexico Agreement, and ongoing structural changes."

The discussion at the March meeting also drew upon a recent speech by Deputy Governor Sharon Kozicki on how the BoC thinks about supply-side shocks: "Members considered the role of monetary policy when a supply shock hits the economy. They noted that inflationary pressures from higher energy prices were expected to push inflation above target with the economy in excess supply. This presents a difficult trade-off for monetary policy."

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Research Alert: Ewbc: Q1 Earnings Beat As Revenue Growth Outperforms

CFRA, an independent research provider, has providedwith the following research alert. Analysts at CFRA have summarized their opinion as follows:EWBC posted strong Q1 2026 results with operating EPS of $2.57 vs. $2.08 a year ago, $0.10 above consensus. Q1 revenue of $774M beat consensus by 3% and rose 12% Y/Y and 2% Q/Q. It was another record quarter as the bank reported record levels of loans, deposits, and fee income, while maintaining healthy credit quality. Net interest income outperformed with 2% Q/Q growth while the net interest margin improved 8 bps to 3.49%, driven by a 21-bp decline in deposit costs to 2.84% that more than offset a 9-bp decrease in loan yields. Balance sheet growth remained robust with total loans reaching a record $58B (+2% Q/Q, +7% Y/Y) and deposits hitting $69B (+3% Q/Q, +9% Y/Y). Loan growth was well diversified across commercial and industrial, commercial real estate, and residential mortgage portfolios. Fee income surged 13% Q/Q to record levels, with wealth management fees more than doubling. The bank's funding optimization efforts continued to bear fruit in the competitive environment.

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Oil & Energy

Hormuz Disruptions Deepen as Oil Prices Rebound and Recovery Timelines Slip, Wood Mackenzie Says

Strait of Hormuz flows remain sharply constrained, with vessel traffic far below normal 170 daily levels and energy markets reacting to ongoing disruption, Wood Mackenzie said Tuesday.Wood Mackenzie said the waterway remains effectively restricted despite ceasefire signals, with uncertainty over safe passage continuing to deter shipping activity.Although the US and Iran are moving toward renewed talks, both sides remain far apart on terms, raising the risk of prolonged disruption to Gulf energy exports.A two-week ceasefire announced on April 7 and a subsequent 10-day pause in Lebanon had briefly lifted optimism around easing tensions, Wood Mackenzie added.However, two Indian vessels were forced to turn back over the weekend after coming under fire while attempting to transit the strait, underscoring ongoing risks.Iran's Islamic Revolutionary Guard Corps warned ships against moving in the Persian Gulf and the Sea of Oman, saying, "approaching the Strait of Hormuz will be considered co-operation with the enemy."Traffic had risen modestly after the ceasefire, with about 20 vessels transiting daily, but this remains far below the roughly 170 ships seen in February, according to Wood Mackenzie.That limited recovery has reversed, with minimal vessel movement recorded on Sunday, signaling continued disruption across oil, gas, and chemicals markets.Oil prices initially fell after the ceasefire, with Brent dropping about 14% from around $110 to below $95 per barrel, and later reaching just above $86, according to the report.Prices rebounded, with Brent June futures rising about 5% to around $95 per barrel, while European gas prices climbed to 61.5 euros ($72.21) per megawatt hour before easing to 40 euros.The United States has tightened its blockade, seizing a cargo vessel and increasing pressure on Iran-linked shipping, while both sides exchanged sharper rhetoric over the weekend, Wood Mackenzie said.Tasnim, a media outlet affiliated with Iran's Islamic Revolutionary Guard Corps, identified several locations that could "enter the conflict zone" if hostilities resume, including the Bab al Mandeb Strait.It also named Saudi Aramco assets and key oil terminals in Yanbu and Fujairah, which serve as alternative routes bypassing the Strait of Hormuz, Wood Mackenzie added.Wood Mackenzie said a peace deal could allow some tankers to resume movement quickly, but full restoration of normal traffic through the Strait of Hormuz may take until the end of June, citing Alan Gelder, senior vice president.Liquefied natural gas exports could see an initial surge after a peace deal, but a full return to normal operations would take longer, Wood Mackenzie said.Massimo Di Odoardo at Wood Mackenzie said restarting Qatar's LNG output could take three to four weeks for the South complex, while recovery of northern facilities would require a longer timeframe.Rising tensions between the United States and Iran have cast doubt on recovery timelines, with prolonged disruption in the Strait of Hormuz threatening deeper imbalances in global energy markets, Wood Mackenzie said.Brent crude has averaged about $85 per barrel in 2026, warning that prices near $90 could push global growth below 2% and into recession territory, said Peter Martin at Wood Mackenzie.

Research

Research Alert: CFRA Maintains Buy Rating On Shares Of Quest Diagnostics

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