A WSJ article came out early this morning, and Bloomberg headlines crossed the wire suggesting that tariffs were not part of President Trump’s immediate plans.
The Wall Street Journal article is here.
TRUMP TO LAY OUT TRADE VISION BUT WON’T IMPOSE NEW TARIFFS YET – WSJ.
— *Walter Bloomberg (@DeItaone) January 20, 2025
While attempting to predict what President Trump might do from moment to moment is impossible, Polymarket odds of Trump imposing tariffs on Canada in his first week plummeted from ~40% to 8% as the headlines crossed.
All things Canada responded positively to the news. In particular, the Canadian dollar is set for its best day in many months, last up a little over 1% versus the USD.
Chart courtesy of StockCharts.com
Meanwhile Canadian energy stocks (as judged by the XEG.to ETF) were up ~1.7% early in the day, despite crude oil and natural gas prices being down. Last week Canadian energy stocks underperformed their US peers by the most since the COVID lows, so the relief rally in the face of a lower tariff threat is a welcome development for Canadian energy producers.
We had speculated last week that “this could set up a slingshot higher if tariffs are not as bad as feared, if they exclude energy, or if they are non-existent.” At least for today, that appears to be the case in Canadian markets.
The new administration will likely continue to keep us on our toes, who knows what tomorrow might bring?
Chart courtesy of StockCharts.com