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Wealth Brokers, Investment Banks Faced Uneven First-Quarter Activity, UBS Says

Wealth brokers and investment banks faced uneven market activity in the first quarter due to geopolitical uncertainty, UBS Securities said in client note sent Wednesday.For the first quarter, UBS is projecting earnings per share to be down 7% quarter on quarter and up 22% annually for wealth brokers. For investment banks, the broker is looking at a 29% slump in EPS on a quarterly basis and an 11% jump year over year."For wealth brokers, growth was tempered by lower March market levels, though retail trading picked up on volatility," UBS analysts, including Michael Brown, wrote. "Organic growth was solid versus expectations, with the setup improving into (2026)."Meanwhile, momentum faded for investment banks during the quarter as pipelines shrank from the year end, "with some deals likely paused pending macro clarity, creating an activity air pocket," Brown said.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.UBS named Charles Schwab (SCHW) and Stifel Financial (SF) as its top picks heading into the first-quarter earnings season, saying Evercore (EVR) is "favorably positioned." Moelis (MC), Lazard (LAZ), and Raymond James Financial (RJF) are expected to "lag on a relative basis," according to the brokerage.UBS upgraded LPL Financial (LPLA) to buy, citing an attractive valuation.UBS lowered its price targets for wealth brokers and investment banks by 8% and 2% on average, respectively.The brokerage expects artificial intelligence to be a key topic at the upcoming earnings season for wealth brokers."In the wealth space, we expect AI to improve advisor productivity, though see risks to sweep cash economics and to market share of advised assets," Brown said. "Ultimately, we see these threats as slower moving than the bears think and see forward-looking firms as well positioned to adapt and thrive."

Fed Should be 'Nimble' Amid War-Driven Macro Risks, March Meeting Minutes Show

The Federal Reserve should be "nimble" in adjusting monetary policy in light of heightened risks to inflation and employment driven by the Middle East conflict, minutes from the central bank's March 17-18 meeting showed Wednesday.At the meeting, the Federal Open Market Committee decided to keep its policy rate unchanged between 3.50% and 3.75% for a second straight time amid uncertainty around the US-Israel war with Iran. The FOMC's Summary of Economic Projections at the time continued to indicate potential policy easing this year."In light of the heightened degree of economic uncertainty, participants emphasized the importance of being nimble in adjusting the stance of policy in response to incoming data, the evolving outlook, and the balance of risks," the meeting minutes showed Wednesday. "Many participants judged that, in time, it would likely become appropriate to lower the target range for the federal funds rate if inflation were to decline in line with their expectations."A couple of policymakers pushed their expected timing of potential policy easing "further into the future," according to the document."The vast majority of participants judged that upside risks to inflation and downside risks to employment were elevated, and the majority of participants noted that these risks had increased with developments in the Middle East," the minutes showed.On 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.West Texas Intermediate crude oil sank nearly 15% to $96.34 a barrel intraday, while Brent futures tumbled 12% to $96.55. Despite the declines, oil prices remained well above pre-war levels."Our baseline view is that as the (energy price) shock gradually fades, so too will inflation pressures," TD Economics Senior Economist Andrew Hencic said in a note Wednesday. "This may open the door for the Fed to normalize rates in the latter half of the year."Most policymakers were concerned that a prolonged war could soften labor market conditions, possibly warranting additional policy easing, the meeting minutes showed Wednesday.Earlier this month, official data showed that the economy added more jobs than expected in March, while the unemployment rate edged down to 4.3% from 4.4% sequentially."Many participants pointed to the risk of inflation remaining elevated for longer than expected amid a persistent increase in oil prices, which could call for rate increases to help bring inflation down to the committee's 2% objective and keep longer-term inflation expectations firmly anchored," according to the latest meeting minutes. "Participants anticipated that, under appropriate monetary policy, inflation would gradually move down toward the committee's 2% objective after the effect of increased tariffs and higher oil prices had faded."Markets widely expect the FOMC to keep interest rates unchanged later this month, according to the CME FedWatch tool.

US Treasury Closing Levels

3:00 Wednesday vs 3:00 Tuesday2yr 100-05 vs 100-02; 3.790% vs 3.829%5yr 99-25+ vs 100-18+; 3.918% vs 3.971%10yr 98-21+ vs 98-09+; 4.289% vs 4.337%30yr 97-27+ vs 97-12; 4.885% vs 4.915%2/10 49.745 bps vs 50.551 bps5/30 96.448 bps vs 94.366 bps

CarMax Poised For Fourth-Quarter Beat Amid Better Industry Trends, RBC Says

CarMax's (KMX) fiscal fourth-quarter results are likely to come in better than expected amid improved industry trends, RBC Capital Markets said in a note sent to clients Wednesday.The used-vehicle retailer is scheduled to release its quarterly and full-year results next Tuesday.RBC continues to expect fourth-quarter adjusted earnings of $0.34 per share for the company, ahead of Wall Street's forecast that the brokerage put at $0.20. RBC now expects a 4.4% year-over-year drop in revenue, compared with its previous estimate of a 6.8% slump. The market view calls for a 5.6% decline."The raise is driven by several data sources pointing to better overall industry trends," RBC analyst Steven Shemesh wrote.Shares of CarMax were up 4.4% in Wednesday afternoon trade amid a broad rally on Wall Street following a two-week ceasefire between the US and Iran.On Tuesday, Cox Automotive said wholesale prices of used vehicles in the US last month hit the highest point since summer 2023 as demand remained robust despite the Middle East conflict."The broader category seems to have improved and it's difficult at this point to decipher how much of the improvement stemmed from recent company-specific actions," Shemesh said. "On the call, we'll be looking for specific evidence that these actions are driving results."RBC has a sector perform rating on CarMax's stock and a $37 price target."We skew slightly more cautious on the sustainability of recent momentum, especially as gas prices rise, offsetting the benefit of higher tax refunds (year over year) and weighing on consumer confidence," Shemesh said.Price: $45.50, Change: $+2.19, Percent Change: +5.06%

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Equity Markets Jump Intraday, Oil Sinks Following US-Iran Ceasefire

US benchmark equity indexes rallied intraday, while oil prices slumped after Washington and Iran agreed to a two-week ceasefire.The Nasdaq Composite jumped 2.9% to 22,651.5 after midday Wednesday, while the Dow Jones Industrial Average increased 2.6% to 47,803.5. The S&P 500 advanced 2.4% to 6,778.6. Barring energy's 4.6% decline, all sectors were in the green, led by a 3.9% rise in communication services.West Texas Intermediate crude oil sank 15% to $95.85 a barrel intraday, while Brent futures tumbled 13% to $95.40.US President Donald Trump, who had set an 8 pm ET, Tuesday, deadline for Tehran 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.However, reports about ceasefire violations signified the possible fragile nature of the pact."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 said in a note.Iran halted oil tanker traffic through the waterway after Israel attacked Lebanon, CNN reported Wednesday, citing semi-official news agency Fars. Separately, Kuwait and the United Arab Emirates reportedly said they were targeted with Iranian drones and missiles.Airline and cruise operator stocks jumped intraday, with Carnival (CCL) up 11%, the top gainer on the S&P 500. United Airlines (UAL) surged 9.9%, among the best performers on the index. Southwest Airlines (LUV) and American Airlines (AAL) were also up sharply, along with Norwegian Cruise Line (NCLH) and Royal Caribbean Cruises (RCL).US Treasury yields were lower intraday, with the 10-year rate down 6.4 basis points at 4.28% and the two-year rate dropping six basis points to 3.77%.In company news, Meta Platforms (META) shares soared 7.9%, among the best performers on the S&P 500, after the tech giant unveiled its Muse Spark artificial intelligence model.Delta Air Lines (DAL) logged better-than-expected first-quarter results amid robust corporate and leisure demand. The air carrier's shares were up 5.8% intraday.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. Shares of the US oil giant were down 5.9%, while smaller rival Chevron (CVX) fell 5.5%, the steepest decline on the Dow.Gold was up 1.7% at $4,764.70 per troy ounce, while silver gained 4.7% to $75.35 per ounce.

The North West Company Q4 Adjusted Earnings Lower

The North West Company (NWC.TO), up near 6% on last look, on Wednesday reported lower fourth-quarter adjusted earnings.The company, which operates grocery stores in Canada's North and the Caribbean, said adjusted earnings, excluding most one-time items, edged down to $43.5 million, from $44.6 million, in the prior year period. The company did not provide per share amounts.Sales for the fourth quarter rose 0.1% to $675.5 million. Analysts polled by FactSet had forecast sales of $658.0 million. Higher sales in the company's international operations sales were largely offset by lower sales in Canada.Canadian same store sales , down 2.8% compared to very strong same store sales gains last year of 6.7%, were negatively impacted by a decrease in the distribution of funding to individuals from First Nations Child and Family Services programs, North West added.North West also said refinanced its $400.0 million and US$52.0 million loan facilities that were originally maturing March 1, 2027. The loan facilities, refinanced with existing lenders, will now mature April 8, 2031.The company will pay a regular quarterly dividend of $0.41 per share on April 24, to shareholders of record on April 15.North West Company shares were last seen up $3.03 to $55.25 on the Toronto Stock Exchange.Price: $55.21, Change: $+2.99, Percent Change: +5.73%

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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.)