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US-Iran Truce Outlook Unclear, Analysts Caution Amid Reports of Ceasefire Violations

Markets hailed a two-week pause in hostilities between the US and Iran, though analysts raised questions about the durability of the truce, with ceasefire violations already making headlines.Global equity markets rallied Wednesday and oil prices plunged below $100 per barrel following an agreement between Washington and Tehran to pause their military conflict that had spread across the Middle East.Trump, who had set an 8 pm ET deadline on Tuesday for Iran to fully reopen the Strait of Hormuz, agreed to suspend planned attacks on Iran for two weeks upon Pakistan's request. Tehran said it would allow "safe passage" through the key trading route, subject to coordination with Iranian authorities."While markets are hailing the agreement as cause for celebration, it remains to be seen if the ceasefire will hold, and if flows resume through the Strait of Hormuz," Stifel Chief Economist Lindsey Piegza said in a report.Reports about ceasefire violations kept investors on the edge, signifying the possible fragile nature of the pact.Iran halted oil tanker traffic through the waterway after Israel attacked Lebanon, CNN reported, citing semi-official news agency Fars. Separately, Kuwait and the United Arab Emirates reportedly said they were targeted with Iranian drones and missiles.Pakistani Prime Minister Shehbaz Sharif, who along with Field Marshal Asim Munir helped broker the truce, said in a post on X that ceasefire violations "undermine the spirit of peace process.""The ceasefire effectively halts imminent large-scale strikes and creates space for negotiations, but it does not resolve the underlying conflict or infrastructure damage," said Suvro Sarkar, head of energy, renewables and infra research at DBS Bank, said. "Two weeks is a very narrow window, and the structural damage to supply chains runs deep."The focus shifts to Iran's 10-point proposal to the US, which includes the lifting of sanctions against Iran, recognition of Iran's enrichment program and continued control over the Strait of Hormuz, according to media reports."If this is truly the basis of negotiation, talks will likely be difficult as some (of) these terms, particularly control of the strait, are likely unpalatable for regional powers with it being reported that Iran still intends to charge a toll for passage," Tudor Pickering Holt analyst Matt Portillo said in a note e-mailed to.

US 10-Year Auction High Yield Rises From Previous Auction, Demand Lower

The US Treasury's 10-year auction hit a high yield of 4.282% on Wednesday, up from the 4.217% high in the previous auction.The bid to cover ratio for the auction was 2.43, below the 2.45 ratio in the previous auction.Dealers represented 54.17% of the bids, with direct bidders at 11.93% and indirect bidders at 33.90%.For takedown, dealers took 10.80%, with direct bidders at 23.88% and indirect bidders at 65.32%.

US 10-Year High Yield 4.282% vs 4.217% Previous; Bid/Cover 2.43 vs 2.45 Previous

Weekly Mortgage Applications Decrease Amid Elevated Rates, Economic Uncertainty

Mortgage applications in the US fell last week amid elevated rates and continued macro uncertainty, the Mortgage Bankers Association said Wednesday.The market composite index, which measures loan application volume, dropped 0.8% for the week through Friday on a seasonally adjusted basis. Without adjustments, the index decreased 1% week over week."Higher mortgage rates and continued economic uncertainty weighed down on mortgage applications again last week," said Joel Kan, the MBA's deputy chief economist. "Many potential refinance borrowers have been frozen out by the sharp increase (in mortgage rates) over the past month."In late March, mortgage rates jumped to 6.38% from 5.98% at the end of the previous month, real estate marketplace Zillow Group (Z, ZG) said earlier this week, citing Freddie Mac data.Late Tuesday, the US and Iran agreed to a two-week ceasefire. The war, which began at the end of February, spread across the Middle East and curtailed shipments through the crucial Strait of Hormuz, driving up energy prices.The average interest rate for 30-year fixed mortgages with conforming loan balances of $832,750 or less fell to 6.51% from 6.57% a week ago, the MBA reported Wednesday. For loan balances higher than that amount, the rate dropped to 6.54% from 6.59%. For 15-year loans, the rate edged higher to 5.90% from 5.89% week to week.The refinance index moved down 3% on a weekly basis, with the pace of refinance applications at its lowest level since December, according to Kan.The seasonally adjusted purchase index rose 1% from a week earlier. Without adjustments, the index increased 1% sequentially, and was 7% lower than a year earlier, representing its first annual decline since January 2025, Kan said."Overall purchase activity has also been adversely impacted by current conditions," Kan said. "However, certain loan types and geographic segments are faring better than others because of lower rates on (adjustable-rate mortgage) and (Federal Housing Administration) loans, as well as growing housing inventory in some local markets."Fixed-rate mortgages with 30-year terms backed by the FHA fell to 6.22% from 6.25% the week before. The share of FHA loans, which are often used by first-time home buyers and can involve smaller down payments, inched lower to 19.3% of total applications from 19.5%, according to the MBA.Price: $41.84, Change: $+1.05, Percent Change: +2.57%

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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."

Share of Canada's Exports to The U.S. Is Gradually Trending Lower, Says Scotiabank

The share of Canadian exports bound for the United States is gradually trending lower, averaging 76% in 2024 and 72% last year, and coming in at 66% in February 2026, said Scotiabank.This has been driven by a decline in exports to the United States and increasing exports to other regions, mainly Europe, noted the bank in a note published last week.In February, exports to the U.S. rose 4.4% month over month but were down 10.4% compared with 2024. Exports to other countries rose 10.5% after a weak January and were up 42.4% from 2024, though much of this has been driven by elevated overseas exports of gold. On the import side, the share of Canadian imports from the U.S. was down slightly in February to 59% from 62% in 2024.Canada continues to benefit from a relatively low effective tariff rate on total exports. 3.1% is Scotiabank's latest estimate, based on pre-tariff trade flows, of the increase in tariffs since end 2024, thanks to most of Canada's trade with the U.S. continuing on a tariff-free basis under CUSMA. This is down from 4.5% in February due to the country-specific U.S. IEEPA tariffs being replaced by a 10% global tariff.The reported average actual duties paid on U.S. goods imports from Canada was slightly above 3% for the third month in a row, down from close to 4% six months ago. This could tick lower in March, given the tariff changes in late February. The proportion of Canadian goods imported into the U.S. facing tariffs has settled around 10%, pointed out the bank.The U.S. trade deficit is back close to its pre-tariff level. U.S. trade saw significant volatility early in 2025 in response to the tariffs, before stabilizing later in the year. In February, U.S. exports rose 4.2% and imports increased 4.3%, resulting in an increase in the trade deficit to US$57 billion, down from around US$70 billion in 2024.The U.S. import tariffs continue to create inflationary pressures in that country, with the latest estimate of the cumulative impact of the tariffs on the U.S. consumer price index reaching nearly a full percentage point and clouding the outlook for U.S. interest rate cuts, especially given recent increases in oil prices.Tariffs and uncertainty continue to be elevated and dynamic, according to Scotiabank. Although the replacement of the U.S. IEEPA tariffs with the temporary global tariff of 10% was positive for Canada, the vast majority of Canadian trade has been compliant and, as such, exempt from those tariffs. The sectoral tariffs are by far the most impactful for Canada, and haven't been affected by the recent changes.

UBS Updates Its Canada Macroeconomic Forecasts Amid High Oil Prices

UBS said it is taking on board the latest moves in oil prices into its Canadian inflation projections with the latest path implied by oil futures, with Brent reaching US$118 per barrel in the May contract before settling at around US$78/barrel by the end of the year and US$73/barrel by end 2027.With this, the bank now expects annual headline inflation of 2.9% this year and 2.4% in 2027. UBS estimates a strong 1.3% non-seasonally adjusted rise in headline inflation in March, carrying the year-over-year rate one percentage point higher to 2.8% in March.UBS predicts headline inflation will peak at 3.4% year over year in April before moderating from there.In the bank's growth projections, it expects a stronger pace of exports, but marked down business fixed investment and consumption.Overall, the bank's annual projections are little changed, with annual growth of 1.6% this year and 1.7% in 2027.The latest monthly gross domestic product data suggests an "okay" start to the year, with monthly GDP up 0.1% in January, a little better than the flat print in the flash estimate, and the flash estimate for February was a 0.2% month-over-month rise.After a strong broad-based decline in employment in February, UBS forecasts a "mild" 16,000 rise in employment in March, with the unemployment rate holding steady at 6.7% in the employment data to be published on Friday.

Exxon Mobil Flags First-Quarter Output Hit Due to Middle East Conflict

Exxon Mobil (XOM) expects its global oil-equivalent output to take a hit in the first quarter due to production disruptions caused by the Middle East conflict.Production at certain upstream assets in Qatar and the United Arab Emirates was impacted beginning in March, according to an Exxon regulatory filing. The attacks included those on two liquefied natural gas trains in Qatar.These disruptions could lower Exxon's global oil-equivalent output by roughly 6% on a sequential basis in the first quarter, the company said Wednesday."Public reports indicate the (train) damage will take a prolonged period to repair," Exxon said. "Pending an on-site evaluation, we are unable to comment on the length of time before the two trains return to normal operations."The Middle East assets represent some 20% of the company's oil-equivalent production across the world, but a smaller percentage of upstream earnings, according to the filing.Including the impact of reduced crude availability at its Asia Pacific operations, Exxon said it expects a 2% sequential drop in its global energy products throughput in the first quarter.Shares of the US oil giant were down 5.8% in Wednesday trade. Smaller rival Chevron's (CVX) stock fell 5.6%. Crude oil prices tumbled following a two-week ceasefire between the US and Iran.Exxon expects a surge in energy prices following the 39-day long US-Israel war with Tehran to boost its first-quarter upstream earnings. The company is scheduled to release its first-quarter results on May 1."First-quarter earnings per share are expected to be higher than the fourth quarter of 2025, excluding unfavorable timing effects that will reverse over time," the company said.Exxon said that it normally sees negative timing effects during times of rising prices.The company said timing effects could result in a $3.3 billion to $4.1 billion hit to first-quarter energy products earnings related to transactions for crude and finished products.Price: $154.13, Change: $-9.78, Percent Change: -5.97%

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With Two of Three Byelections Considered 'Safe' Wins For Liberals Next Week, and With Latest Conservative MP Defection, PM Carney May Be Set To Head Majority Govt

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This Comes Ahead of Three Byelections; Liberals Were Two Seats Shy of a Majority Heading In To Those Byelections

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MP Marilyn Gladu Becomes Latest Conservative MP In About a Year To Cross the Floor and Join Federal Govt of PM Mark Carney's Liberal Party

Canada's Office Market Is Getting Off The Floor, Says BMO

One area of the Canadian real estate market that is tightening up is maybe the last place many would have expected said Bank of Montreal (BMO), it's the office market.Office vacancy rates nationally dipped for a third-straight quarter in Q1, according to CBRE, although still very elevated at above 17%, stated BMO.There is a clear improvement starting in the Greater Toronto Area with limited new supply and some net absorption with more return-to-office activity, pointed out the bank.Contrast that to areas like industrial, which was heavily supplied in recent years, or multifamily, which was heavily supplied and demand is also crumbling with population growth, it added.This isn't to say this is a strong office market yet, but it's one that is getting up off the floor, especially in prime areas, according to BMO.

Market Chatter: PM Carney Responds to Canadians Facing Around $2/L at Gas Pumps

Prime Minister Mark Carney says the federal government is aware of the high gas prices Canadians are facing, and amid uncertainty over how long the war in Iran may persist, he's "looking at" ways to help, CTV News is reporting Wednesday."What can we do to help cushion the blow for Canadians?" Carney asked at an event in Brampton, Ont. "That's something we're looking at."Carney made this comment in response to a reporter asking what he'd say to Canadians facing around $2 per litre at the pumps.The prime minister said he knows Canadians are asking themselves every day when they go to fill their tanks or heat their homes, why they feel as if they're bearing the costs of the Iran-U.S. war. Carney said "the short answer is because there's a global market.""Those countries that have lots of oil and gas see their prices go up alongside with those who don't have that oil and gas. It's the same shifts up in prices in the United States as well," Carney continued.Carney indicating that the Liberals are considering ways to offer consumers relief, comes on the heels of Conservative Leader Pierre Poilievre calling for gas taxes to be scrapped for rest of year. It also comes ahead of the spring economic update expected in the coming weeks.The prime minister offered no additional detail on what help his government may have in mind, or be considering, nor the timeline for when any measures may come into effect.Today Poilievre followed up on his call last week, by publishing a formal letter he sent to Carney. In it, he asks the PM to suspend the federal fuel excise tax and the GST on gas and diesel, and use the "massive windfall" the federal government is experiencing due to fuel costs, to fund it.(Market Chatter news is derived from conversations with market professionals globally, and/or from other media sources. This information is believed to be from reliable sources but may include rumor and speculation. Accuracy is not guaranteed.)

Scotiabank Sees Canada's New Vehicle Sales Rising Gradually This Year, in 2027 After Q1 2026 Holds Steady

Canadian auto sales marginally declined 0.1% month over month to 1.81 million units at a seasonally adjusted annualized rate (SAAR) in March, based on data from Omdia, said Scotiabank.Upward revisions to data for January and February resulted in Q1 sales averaging 1.79 million SAAR units, stronger than previously expected but still down 0.2% relative to Q4 2025.Non-seasonally adjusted (NSA) sales reported by the same source for March were 170,600, down 7.8% year over year, although compared with a relatively strong start last year before newly imposed tariffs began to upend global trade.When comparing Q1 sales in NSA terms against the same period across recent years, sales were down 6.5% relative to 2025 and down 2.3% relative to 2024.The recent decline in seasonally adjusted new vehicle sales may have bottomed out, as the selling rate over the past two months has increased in line with historical trends, stated Scotiabank. However, only time will tell as there remains a host of competing factors that will impact demand.Canada's overall employment level contracted in January and February, while the unemployment rate trended sideways around 6.7% three-month moving average. Global oil prices remain elevated amid the conflict in the Middle East, which is widely expected to push up headline inflation, while the Bank of Canada will be looking for signs of risks that higher input costs are being passed through to core inflation.While the bank estimates that higher oil prices are likely a small net positive to Canadian gross domestic product growth, higher costs at the pump may weigh on vehicle demand in the near term. Meanwhile, the new federal Electric Vehicle Affordability Program may boost EV sales over the coming months.Scotiabank's outlook for Canadian light vehicle sales is 1.81 million this year. The bank expects demand to gradually improve throughout this year and next, rising to 1.87 million in 2027, although with larger uncertainty given elevated and volatile oil prices clouding the outlook.

RPM Beats Fiscal Third-Quarter Estimates, Affirms Sales Growth Expectations

RPM International's (RPM) fiscal third-quarter results topped market expectations, while the specialty coatings manufacturer reiterated its sales growth outlook for the ongoing three-month period.The company on Wednesday reported adjusted earnings of $0.57 per share for the quarter ended Feb. 28, up from last year's $0.35, which was the consensus on FactSet. Sales advanced 8.9% to $1.61 billion, topping the Street's view of $1.55 billion.The stock jumped 12% in Wednesday trade, taking its year-to-gain 4.8%. RPM is the parent of brands including Varathane, which offers wood-finishing products."In a period of volatile market conditions, we generated volume growth and record sales by utilizing our competitive strengths and nimbly focusing on growing end markets," Chief Executive Frank Sullivan said in a statement. "We demonstrated our ability to combine growth with efficiency, leveraging higher volumes to expand margins across all segments."RPM continues to project fourth-quarter sales to increase by a mid-single digit versus the prior-year period. The Street is looking for $2.17 billion."We expect to grow sales and adjusted (earnings before interest and taxes) again in the fourth quarter and deliver record results, even as we face more challenging comparisons and geopolitical uncertainty in the Middle East adds cost and complexity to the operating environment," according to Sullivan.The US and Iran on Tuesday agreed to a two-week ceasefire. The war, which began at the end of February, spread across the Middle East and curtailed shipments through the crucial Strait of Hormuz, driving up energy prices.The company is seeking to mitigate higher raw material costs and ensure supply, while implementing pricing actions to offset the remaining cost headwinds, Sullivan said.In the third quarter, sales in the construction products segment climbed nearly 11% to $546.7 million, driven by the company's North American businesses. The performance coatings division saw revenue increase 8.4% to $496.8 million, while the consumer business improved 7.9% to $564.5 million.Price: $108.69, Change: $+11.98, Percent Change: +12.39%

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"Most Curious Development" Today Is Why Traders Still Believe Next Move By the BoC Will Be a Rate Hike, says Rosenberg Research

According to Rosenberg Research in a comment on Canada within Wednesday's 'Early Morning With Dave' note a "most curious development today" is why traders still believe the Bank of Canada will be making its next move a rate hike, "or a steady diet of rate hikes, for that matter.""Consumer confidence just sagged to its lowest level in 11 months, so why not add interest rates to the list of factors depressing the local economy?," asks Rosenberg Research, sarcastically.At a time when, pre-Iran war, there was absolutely no inflation problem to speak of, it notes.Over the past month, the research notes, the share of Canadians seeing economic improvement has practically been sliced in half to a mere 15% from 27%. And for the first time in over four years, the Canadian economy has shed more than 100,000 jobs in a two-month span. "Fertile environment for a BoC rate increase, don't you think?," it says, while also noting home sales in the Greater Toronto Area (GTA) in March were 52% below the norm of the past 10 years."So as things stood before the Iran war, all Canada's central bank was doing in its easing process was pushing against a string because it's difficult to stimulate credit-related activity when domestic consumer balance sheets are saddled with a near-record debt-to-income ratio," it said.Rosenberg Research further asks: Concerned about inflation in Canada? How about deflation? As, it says, in the grim reality that average home prices, which represent $8.5 trillion of assets on the household balance sheet (2.5 times the size of nominal gross domestic product), have declined 7% over the past year in the GTA -- and more to come with supply hitting the market to such an extent that new listings have ballooned 11.5% on a year-over-year basis.Rosenberg said that it wasn't the only one who didn't see a BoC rate hike because the foreign exchange market was doing so too by taking the Canadian dollar (CAD or loonie) to $1.39 (below 72 US cents) for the first time in four months.

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Delta Air Lines First-Quarter Results Top Views; Sees Fuel Expense Increase of Over $2 Billion

Delta Air Lines (DAL) on Wednesday reported better-than-expected first-quarter results amid robust corporate and leisure demand, although the carrier flagged a fuel expense increase of more than $2 billion in the current three-month period due to the Middle East war.The company posted adjusted earnings of $0.64 a share for the March quarter, up from $0.45 the year before, topping the FactSet-polled consensus of $0.58. Operating revenue climbed 13% to $15.85 billion. Total passenger revenue gained by 7% while cargo inclined 9%."We delivered earnings that were more than 40% higher than last year, even with a significant increase in fuel costs and operational disruptions across the industry," Chief Executive Ed Bastian said in a statement. The stock jumped 12% in the most recent premarket activity.Operating revenue improved 9.4% to $14.2 billion on an adjusted basis in the first quarter, ahead of the average analyst estimate for $14.05 billion. The metric grew amid "broad demand strength across corporate and leisure," Chief Commercial Officer Joe Esposito said. Adjusted total revenue per available seat mile grew 8.2% on a yearly basis, with gains across all regions.The airline is taking measures to protect its margins and cash flow, including "meaningfully reducing capacity growth with a downward bias until the fuel environment improves, and moving quickly to recapture higher fuel costs," Bastian said.The US and Iran on Tuesday agreed to a two-week ceasefire, having been in a military conflict since the end of February. The war spread across the Middle East and curtailed shipments through the crucial Strait of Hormuz, driving up energy prices.For the ongoing quarter, Delta anticipates fuel at the forward curve as of April 2, resulting in a projected all-in price of about $4.30 per gallon, pushing fuel costs up by more than $2 billion. In the previous quarter, adjusted fuel price increased 7% year over year to $2.62 per gallon.Adjusted EPS is pegged at $1 to $1.50 for the second quarter on low-teens revenue growth, according to Delta. The Street is looking for non-GAAP EPS of $1.56 and revenue of $17.21 billion. Capacity is expected to be flat year over year amid the airline's capacity reduction and fuel recapture efforts, Esposito said."In the June quarter, we expect to lead the industry with $1 billion of profit," according to Bastian. "And while the recent fuel spike is currently impacting earnings, I'm confident this environment ultimately reinforces Delta's leadership and accelerates long-term earnings power."

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Markets Rally Except for Commodities After U.S.-Iran Ceasefire, Says Scotiabank

Everything is rallying in financial markets on Wednesday except for commodities after the United States and Iran agreed on a two-week ceasefire, said Scotiabank.Position covering may be amplifying the swings and driving somewhat of an overreaction, pointed out the bank.Oil prices are volatile but sharply lower by double-digit percentages, although the futures curve remains elevated at sustainably higher prices throughout 2026-27 than the spot prices back at the start of the year, noted the bank.That clearly signals market concern toward a) the possible fragility of the ceasefire amid uncertain negotiations, and b) the longer-term damage to geopolitical risk premiums and infrastructure, stated Scotiabank.Stocks are broadly higher with North America futures up by about 2% to 3%, European stocks are up by 3% to 5%, and Asia-Pacific benchmarks rallied by 3% to 7% across the main benchmarks.Sovereign bond yields are broadly lower with eurozone government bonds outperforming via declines of 20bps-30bps across maturities and countries, while U.S. Treasuries are rallying by 'just' 5bps-7bps, and Canadian government bonds are dearer by 10bps at the front end in a bull steepener, added Scotiabank.The US dollar (USD) is broadly weaker, although the Canadian dollar (CAD or loonie) is slightly underperforming other crosses due to lower oil, according to the bank.

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