The data aren't providing any reason for the Bank of Canada to pause. The risks are on the upside for rate increases. Investors are going to sell bonds. |
The market is starting to price out some of the rate increases that have been priced in. |
The strength of today's report certainly will not be lost on the Bank of Canada ... as a result, we still believe the odds favor another rate hike from the bank in April. |
The weakness in the Canadian dollar is essentially a follow-through from yesterday's Fed rate decision that has the market anticipating at least one more hike. |
There's little market reaction I think for two things. First, the strength was anticipated to some extent. Second, the market is very tightly focused on what the Bank of Canada is doing this afternoon. |
They said nothing's changed in their view of the economy so markets focused on the word 'modest' to mean they'll be less aggressive. |
This basically confirms their story, so steady as she goes on that front. |
This is really a tale of two job markets. |
This may be partly a commodity price story. |
This morning's merchandise trade report certainly came as a shocker, but this is one case where the headline looks much worse than the details of the data. |
This report paints a picture very similar to the fall survey and shows an economy practically at full capacity. |
What we're seeing in terms of currency movements - and it will probably continue at least over the near-term - is a shift in global monetary policy expectations. There's a gearing-down of expectations for Fed tightening, coupled with increased tightening expectations elsewhere. |
You should see Canada's 10-year bonds rally in the second half of this year. I don't see a big appetite on the part of the Bank of Canada to hike interest rates as the economy slows. There is no compelling reason to go beyond 4 percent. |