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Treasury
Bank of Canada Minutes Reveal A Neutral Stance, Not Hawkish, Says Rosenberg Research
The Bank of Canada's minutes for its April 29 rate decision were released on Wednesday, notes Rosenberg Research."By far", it said, the most important quote was: "With slack in the labour market and excess supply in the economy, businesses would be less likely to pass higher costs on to consumers. Given this starting point, and with the policy interest rate on the stimulative end of the range for the neutral rate of interest, members agreed they could look through the initial inflation shock from higher oil prices."In other words, the research added, the "calm" CPI-trim and CPI-median measures and the weak labor market in Canada will stall any immediate rush to raise rates. The warnings were all about the risk that inflation would become "more persistent" in a sustained oil shock.On balance, the minutes are still more hawkish than prior, but are explicitly two-sided and keep both cuts and hikes on the table, said the research. Hard to square that with the nearly two hikes that are still priced in, it added.The BoC also touched on the housing market, which has been persistently weak, the research noted. The BoC described housing weakness as at least partly structural -- based on slower population growth and a lack of affordability -- rather than entirely cyclical.Rosenberg said: "This is partly an exercise in blame-shifting: if it isn't entirely cyclical, the BoC's rate policy isn't the only cause. This might be true -- but we still assesses that the slow pace of easing in the last 18 months was a contributing factor to current housing weakness."
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Treasury
Canada's Wholesale Trade Rise a Tad Better Than Expected in March, says StatsCan
Canadian wholesale sales, excluding oil, oil products, and other hydrocarbons and excluding oilseed and grain, rose 1.9% month over month to $89.0 billion in March, said the country's statistical agency on Thursday.March's rise was slightly better than the 1.3% month-over-month consensus figure provided by Scotiabank.Sales increased in five of the seven subsectors, representing 79.6% of total wholesale sales, noted Statistics Canada in a statement. The largest increase came from the machinery, equipment and supplies subsector.Wholesale sales were 3.3% higher in March than in the same month one year earlier.In volume terms, wholesale sales excluding oil, oil products, and other hydrocarbons and excluding oilseed and grain increased 1.7% month over month in March.Wholesale inventories, excluding oil, oil products, and other hydrocarbons and excluding oilseed and grain, increased by 0.3% month over month to $137.2 billion in March, pointed out StatsCan.Inventories rose in three of the seven subsectors in March, with the largest increases occurring in the machinery, equipment and supplies subsector (2.0% to $41.4 billion) and the food, beverage and tobacco subsector (0.5% to $15.6 billion).The inventory-to-sales ratio decreased from 1.57 in February to 1.54 in March. This ratio measures the number of months required to exhaust inventories if sales remain at their current levels.
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Treasury
BMO on The Day Ahead in Canada
Canada will release March wholesale trade and new vehicle sales figures at 8:30 a.m. ET on Thursday, with the former expected to rise 1.5% month over month while the latter could decline 8.0% yeat over year, said Bank of Montreal (BMO).Released earlier Thursday, Canada's existing home sales rose 0.7% month over month in April, the first advance in six months, though still down 4% in the past year and 10% below the decade norm for the month, noted the bank after data from the Canadian Real Estate Association (CREA) released.New listings outpaced sales, lowering the sales/listings ratio to 45.6%, on the edge of sellers' market territory.Consequently, benchmark prices slipped a further 0.1% in the month and are down 4.2% year over year. Southwestern Ontario and parts of British Columbia remain the national weak spots, though Alberta is also slipping.These regional markets are likely to remain soft for a while and more so if the Bank of Canada pulls the tightening trigger, added BMO.
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