The Daily Chase: Fed decision day, and TMX gets final OK to open

Here are five things you need to know this morning.

Fed expected to stand pat: It’s decision day at the U.S. Federal Reserve, and while the central bank isn’t expected to announce a change to its benchmark interest rate when it’s latest policy decision is revealed at 2 p.m. ET, the statement and accompanying press conference will be closely scrutinized for clues as to their line of thinking. It wasn’t that long ago that markets were expecting four or more rate cuts this year, including one that would have already happened. But a lot has changed since the end of 2023, as the U.S. economy has proven itself to be surprisingly resilient. That unexpected strength despite high rates has ratcheted down expectations that the Fed will need to ease, and as things stand this morning, the swaps market is fully pricing in just one cut this calendar year, and even then likely not until the final month of 2024. We’ll know more this afternoon, and have extensive coverage on the air and online.

TMX pipeline expansion set to open today: The Trans Mountain Pipeline Expansion is officially on track to open today, after Canada’s Energy Regulator gave the OK to the pipeline operator’s leave-to-open application; the final regulatory hurdle that was standing in the way. The regulator granted the request on Tuesday, according to a statement on its website, which means there’s now nothing stopping the massive pipeline expansion from operating as its owners see fit. While the project has seen numerous delays and run billions of dollars over its original price tag, the opening of the pipeline is nonetheless a momentous development for Canada’s oil patch, as it will almost double the amount of crude that can be shipped every day from Alberta to export terminals in British Columbia. Accessing more Asian markets has been the main selling feature of the pipeline all along, but in the short term, a somewhat unexpected new market for Canadian oil has emerged as refineries on the Pacific Coast of the U.S. have shown an appetite. The discount on Canadian heavy crude is currently about US$12 a barrel and the TMX is expected to help narrow that gap.

Cruise operator Viking prices IPO near top end of range: Cruise line operator Viking Holdings Ltd. is set to go public on the NYSE today, after the company successfully sold 11 million shares at US$24 apiece to investors in an IPO on Tuesday. Backers added an additional 53 million shares to the pot, so the deal will raise $1.54 billion for the owners of the company that operates art and history-themed river cruises for affluent English speaking adults, primarily in Europe. At $24, the price is toward the top of the range of 21-25 that the company had previously forecast, and suggests strong appetite for the shares. It’s the second-largest IPO in the U.S. this year, and there’s a Canadian connection. Outside of founder Torstein Hagen, who controls 87 per cent of the voting shares in the company, one of Viking’s two other shareholders of note is the Canada Pension Plan Investment Board, who will be divesting an unknown stake in the company as part of the offering. Filings show that Viking booked a profit of $399 million on $3.2 billion of revenue last year. Early reports indicate the IPO was 15 times oversubscribed (meaning there were 15 times more buy orders than there were shares available) which suggests the shares are going to pop when they start trading later today.