Canada
The Bank of Canada kept rates unchanged and still sees two-sided risks around the inflation outlook. The policy rate was left at 2.25% for a fifth consecutive meeting, in line with expectations. At 2.25%, it remains at the bottom of the BoC’s estimated…
The Bank of Canada left rates unchanged and emphasized inflation risks from higher oil prices. We discuss why inflation and labor market data argue against the tightening currently priced.
Canada’s labor market is showing early signs of stabilization, but not sufficient for the Bank of Canada to begin raising rates. Employment increased by 88k in May, well above expectations of 10k, led by a jump in full-time employment, while the unemployment…
Canada’s growth backdrop has weakened sharply. Q1 GDP fell 0.1% on a quarterly annualized basis, missing expectations for 1.5% growth, after Q4 was revised down to a 1% contraction. The drag is broadening. Business capital investment fell 0.7% q/q, its…
The US and Canada face increasingly different macro backdrops, and that divergence should support Canadian bonds versus Treasuries. US data has stayed resilient, surprising positively and showing growth momentum. Meanwhile, Canadian data has increasingly…
Canadian April inflation came in cooler than estimates, giving the Bank of Canada some reassurance even as headline CPI accelerated. Headline inflation rose to 2.8% y/y from 2.4%, but came in below the 3.1% consensus. Both of the Bank of Canada’s preferred…
The Hormuz shock has pushed rate expectations higher in both Australia and Canada, but the inflation and growth transmission is already diverging. Canada’s status as a net energy exporter helps cushion the domestic growth impact from higher oil prices, while…
Canada’s data keep disappointing, and stable but still-restrictive financial conditions point to subdued growth ahead. As we recently highlighted, Canadian economic surprises turned negative earlier this year and have kept falling. Canada also faces several…
Canada’s growth outlook is deteriorating, with labor-market slack rising and economic surprises turning lower. Canadian economic surprises have turned negative and continue to fall. The April jobs report disappointed, with employment contracting for the third…
Volatility is high, but the path for yields is clearer than it looks. Across three oil scenarios, we show how policy responses shape fixed income markets and why the balance of risks still points to lower yields.