Greater Toronto Area Homes Sales Rise in May as Prices Slip; Prices May Climb Closer to 2027, Says Board

National Bank Sees Slack in Canada's Economy Continuing in Near Future

Bank of Canada rate hike expectations have moderated significantly since the last auction on hopes for a permanent peace deal in the Middle East and ongoing weakness in Canadian economic data, said National Bank of Canada.Most notably, last week's gross domestic product report delivered a significant downside surprise and revealed that the economy was in "technical recession" around the turn of the year, noted the bank.While National Bank would push back against the recession characterization, it's clear there is slack in the economy, and it expects that to persist in the near future.Soft domestic conditions will continue to lean against the spike in headline inflation and should assuage some of the BoC's concerns that energy inflation could "broaden" into the prices of other goods and services, stated the bank.National Bank estimates the BoC to reiterate a patient stance in its policy decision next week and still sees the Canadian central bank remaining on the sidelines through the end of the year.However, the bank doesn't predict market expectations for a tighter BoC policy to be fully priced out, as the risk profile remains skewed toward rate hikes rather than cuts.

Commerzbank on Overnight News

Commerzbank in its "European Sunrise" note of Wednesday highlighted:Markets: United States Treasuries remain on the weak side, short-end yields continue to increase in Asia. Equities are mixed with U.S. equities closing near records, Nikkei up almost 3%, Hong Kong stocks down and U.S. futures flat. Brent increases to US$97/barrel. Japanese gvoernment bond curve bear-flattens.Fed: New Federal Reserve Chair Kevn Warsh hires conservative policy analysts as advisers.U.S.: Trump administration proposes new 10% tariffs on goods from the European Union and others, following an investigation into forced labor. China, India and others would face 12.5%.Iran war: Iran attacks various targets in the Middle East, including Saudi Arabia and Dubai; the U.S. strikes Qeshm Island. Secretary of State Marco Rubio says Iran's supreme leader is communicating with the U.S. in writing and through intermediaries.==EUROPE:ECB: Euroepan Central Bank Governing Council (GC) member Pierre Wunsch says that the Iran peace deal wouldn't derail rate hike. GC member Olaf Sleijpen says that the ECB needs to determine whether the energy price surge drives broader price increases.BoE: Bank of England Governor Andrew Bailey signals that Gilt sales could continue for another one or two years. Policymaker Megan Greene says hikes are likely needed as the Iran war drags on.EU: A 20 billion euros investment plan for artificial intelligence faces delays over a lack of clarity about demand (Bloomberg sources).==ASIA:Japan approves 3.1 trillion yen stimulus package to cushion rising commodity costs.

US 10-Year Treasury Yield Jumps 3 Basis Points to 4.49%, 2-Year Rate Climbs 2.7 Basis Points to 4.08% Early Wednesday