Liberals Set for 3rd Minority Win Under Carney

Today's expected range for the Canadian Dollar against the major currencies:

US Dollar        1.3730-1.3960

Euro                 1.5630-1.5870

Sterling            1.8410-1.8650

WTI Oil (opening level) $61.00

The CAD/USD is opening at 1.3846 ( 0.7222 )

Canada's Liberal Party, led by Mark Carney, is projected to win a third consecutive minority election. A major turnaround for a party that seemed on track for an election drubbing just four months ago, before repeated Trump attack changed the focus among voters. The Liberal party is expected to fall short of the 172 seats needed for a majority in the House of Commons and will need to work with the NDP to pass legislation.

So Canada will continue to have a Liberal Marxist government that will drive spending/ debt to higher levels. Look for the CAD to weaken on this news.

Headlines

US Treasury Secretary Bessent urged China to de-escalate, stating that 145% tariffs are unsustainable and he prefers not to use prepared measures. He noted Chinese exemptions suggest a desire for trade de-escalation and mentioned 15-18 key trade negotiations, including with China, where good proposals have been made, though China's situation is complex, according to CNBC. He also stated that he has an “escalation ladder in his back pocket”, which are export embargoes on the US goods that China has announced tariff carveouts on, though he hopes that he doesn’t have to use them. 

A WSJ exclusive late yesterday suggested that the Trump administration is looking at not “stacking” US tariffs on imported cars and auto parts, in other words, not adding the 25% tariffs to other tariffs against a country.

The April Dallas Fed’s business activity index for Texas manufacturing fell 19.5 points to -35.8, it's lowest since May 2020. Production decreased to 5.1, new orders to -20.0, shipments to -5.5, and capacity utilization to -3.8. The company outlook index dropped to -28.3, while uncertainty rose to 47.1.

In April 2025, the CBI's UK retail sales gauge rose to -8, it's highest in six months, exceeding expectations and improving from -41 in March. However, the May outlook dropped to -33, the lowest in over a year. Despite slower declines, firms are concerned about weak consumer sentiment and global uncertainty. Retailers urge government action to boost confidence, as no sales recovery is expected.

Mexico's trade surplus rose to $3.44 billion, surpassing expectations. Exports increased by 9.6% to $55.5 billion, driven by accelerated shipments ahead of US tariffs. Non-oil exports grew 9.7%, with notable rises in mining products (+34.1%), manufactured goods (+10%), and machinery (+50.2%). Car exports were up 6.2%, with US sales increasing 6.5% and other markets 4.0%

Spain and Portugal are recovering from a major blackout, with Spain's power nearly fully restored and urban trains running again. The cause remains unknown, though PM Pedro Sanchez said 15 gigawatts vanished from the grid for five seconds. The incident raises concerns about Spain’s increasingly renewable-dependent grid and its economic impact.

Key Points

Equities: Big Tech earnings in focus; tariffs weigh; Porsche cuts outlook

Volatility: VIX stable; VIX1D falls; option volumes high beyond TSLA/NVDA

Digital Assets: BTC steady after surge; IBIT sees $971M inflows; ETH whale buying

Currencies: USD rebounds overnight after selling pressure yesterday, though USDJPY remains lower than yesterday on drop in US yields

Fixed Income: US treasury yields drop all along the curve yesterday and overnight

Commodities: Yesterday’s gold rebound partially erased, crude oil trades heavily