Canada
Our FICC strategists believe that CAD and Canadian equities are likely to lag in the near term, but both should outperform over a three-to-four-year horizon. Housing will remain a drag next year and labor market weakness will likely hurt consumption. Wealth…
Markets expect the BoC to hike by 100 bps over the next year; we do not. Housing and labor weakness argue for owning Canadian bonds now, while Carney’s reforms and a resource capex wave make the CAD and resource stocks multi-year winners.
The Bank of Canada’s Q3 Business Outlook Survey improved but still points to weak momentum. The headline BOS indicator edged up to -0.33 from -0.38, and firms’ assessment of business conditions improved. However, most responses predate the August 21 collapse…
The Canadian dollar has fallen over the past month as widening rate differentials and stronger US growth have favoured the greenback. CAD sits in the middle of our G10 FX Scorecard, with weak growth and low carry weighing against attractive terms of trade,…
MacroQuant recommends an underweight to equities and bonds, counterbalanced by a significant overweight to cash. The model is very bullish on the US dollar, slightly negative on gold and copper, and positive on oil.
Canadian equities have corrected despite rising commodity prices, as weakness in Energy, Materials and IT has outweighed gains in banks. Energy stocks entered the month with stretched valuations following a strong earnings season, leaving the sector…
August inflation remained contained, reinforcing our view that markets are pricing too much BoC tightening and supporting Canadian government bonds relative to US Treasuries. Headline CPI was in line with estimates at 3.0% y/y, unchanged from July and at the…
Canadian banks are overdue for a correction as stretched valuations, a weakening housing market and fading support from the yield curve create growing downside risks. Bank equities have continued to surge even as the 2-year/10-year spread has stopped…
The August Canadian jobs report underscores how fragile the growth outlook remains, with employment contracting and wage growth slowing sharply. Employment fell by 41.7k, missing estimates for a 15k gain after July’s 75.1k increase, with most of the losses in…
The Bank of Canada held rates at 2.25%, with two-sided stagflationary risks returning but the BoC tilting slightly more toward upside inflation risks than downside growth risks. The overnight rate remains at the bottom of the BoC’s estimated neutral range…