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PM Mark Carney To Pitch Canada As An Investment Hub at New York's Economic Club Today

Brief: Bank of Canada's Senior Deputy Governor Carolyn Rogers Speaking at 2026 Financial Stability Report Press Conference

Bank of Canada Still Sees Country's Financial System Functioning Well Despite U.S. Tariff Turmoil, Geopolitical Risks

Bank of Canada views households and businesses as being in "stable condition," said Desjardins after Thursday's presentation of the BoC's 2026 Financial Stability Report (FSR).While household debt levels remain elevated, the FSR pointed out that wealth has been on the rise, noted the bank. Metrics measuring household stress haven't changed much over the past year. The share of borrowers in arrears is still elevated amongst non-mortgage holders, with arrears for mortgage holders remaining low overall.That said, there have been pockets of weakness even within mortgage holders, stated Desjardins. Those with the largest mortgage balances have experienced the most stress, with the Toronto area a particular concern.Over the next 12 months, roughly 12% of mortgage holders are expected to face higher payments, with an average increase of 15%, similar to last year. However, those with shorter terms won't, on average, see their payments increase.Looking further ahead, the BoC noted that, "By the second half of 2027, nearly all mortgage holders facing large payment increases will have renewed".Businesses also remain on a steady footing. The FSR shows that non-financial firms continue to hold more cash and liquid assets than was the case before the pandemic. The central bank noted, "Even in sectors most vulnerable to US tariffs-such as manufacturing-financial health has remained broadly stable".After rising for a couple of years, impairment rates on business loans have plateaued overall, even though smaller businesses are still seeing rising loan impairments.Policymakers believe that Canada's largest banks are now even more capable of withstanding shocks than they were previously, added the BoC. The FSR says that, "Improved profitability and good access to funding are supporting resilience."The banks have also set aside additional funds to guard against the myriad of risks facing the Canadian economy. Central bankers wrote, "Even in a stress test where an escalation of the war in the Middle East leads to a prolonged period of high oil prices and acute financial system stress, Canada's large banks are expected to remain resilient and able to support the economy."By definition, the FSR is a document focused on risks, but the BoC's optimism in several key areas is comforting even for the base case economic outlook, added Desjardins. The months to come could bring extreme volatility, with trade negotiations set to heat up and geopolitical risks still high.The good news is the central bankers believe the Canadian financial system is adequately prepared for whatever harsh weather may come, thereby reducing the perceived probability of tail risks materializing, according to the bank.

Brief: Bank of Canada's Rogers Says Higher Risk Now Vs. 2025 Is Bigger Role of Hedge Funds in Sovereign Debt

Brief: Bank of Canada's Rogers Says Risks "Stable" in 2026 Financial Stability Report Vs. 2025

Bank of Canada's 2026 FSR Notes New "Manageable" Vulnerabilities Amid Well-Functioning Financial System

Canada's financial system has functioned well through a challenging year as households and businesses remain in stable financial condition, and banks have strengthened their capacity to absorb shocks, said Bank of Canada on Thursday.However, vulnerabilities have increased in some parts of the system, noted the central bank in its annual Financial Stability Report (FSR). Stock and corporate debt valuations have risen and are high relative to historical norms. This makes markets more vulnerable to a sharp correction.The issuance of global sovereign debt is also rising, and hedge funds are playing a bigger role in buying that debt, often using borrowed money, pointed out BoC. In normal times, hedge fund activity helps keep markets running smoothly. But if conditions become strained, this activity could amplify stress and disrupt core funding markets.Individually, these and other vulnerabilities look "manageable", stated BoC. However, the economic and geopolitical environment has become more volatile. This has made it more likely that a new shock or a combination of shocks could cause several vulnerabilities to crystallize at once. If this were to happen, these vulnerabilities could interact and reinforce each other.A "cascading" series of events could cause a sharp loss of investor confidence and lead to a spike in demand for liquidity or rapid asset sales. Funding markets could come under pressure, and stress could spread more broadly.The FSR isn't about what Canada's central bank expects to happen. It is an assessment of how existing vulnerabilities -- or pockets of stress -- could amplify shocks and ultimately spread across the financial system.New risks are also emerging, particularly from artificial intelligence (AI), added the BoC's FSR. AI is expected to boost productivity and economic growth over time, but it's sparking concerns about disruption in some sectors and about overinvestment. AI may also increase the speed, scale and sophistication of cyber attacks.

Brief: Bank of Canada's FSR Notes AI Risks on Disruption in Some Sectors, Overinvestment, Cyber Attacks Strength

Brief: Bank of Canada's FSR Says "Cascading" Series of Events Could Cause Funding Markets to Come Under Pressure, for Stress to Spread More Broadly

Brief: Bank of Canada's Annual FSR Says "Vulnerabilities Look Manageable"

Bank of Canada's Financial Stability Report Notes Markets More Vulnerable to Sharp Correction as Equity, Debt Valuations Higher Than Hostorical Norm

Canada's Current Account Remains Under Pressure Despite High Energy Prices, says BMO

Canada's current account deficit widened to $7.2 billion, or $28.7 billion a.r., in Q1, following a shortfall of $1.0 billion, or $4.0 billion a.r., in Q4 2025, noted Bank of Montreal after Thursday's data.This amounts to an estimated 0.9% GDP, in line with recent norms, BMO said, while noting the latest GDP data will be released Friday.A wider goods trade deficit has driven the deterioration amid significant tariff uncertainty, said the bank. However, the late-February outbreak of the Iran war marked a shift in trade flows by driving up prices for key Canadian exports, especially energy, in March, it added.According to BMO, high oil prices will continue to support merchandise exports through Q2.Meantime, an improvement in the services trade surplus was driven by commercial -- largely from an increase in financial services exports -- and travel services, BMO said. The latter was helped by an ongoing decline in Canadian travel to the United States, while spending in other destinations remains sturdy, it added.The primary income account shifted to a deficit on a much smaller investment income surplus. The surplus in direct investment shrank as profits earned by international investors in Canada outpaced those earned by Canadian investors abroad, BMO noted.The secondary income account -- which had been in deficit since 2016 -- improved to a balanced position on a surge in Canadian tax receipts, it also noted.Among other highlights, foreign direct investment (FDI) into Canada slipped to $22.0 billion in Q1, largely directed to energy and mining, BMO said. Meantime, domestic companies' direct investment abroad jumped to $39.2 billion. That resulted in a net FDI outflow of $17.2 billion, the third outflow in the past four quarters, it addedWhile the energy price shock will support Canadian trade flows over the short term, the current account remains under pressure as long as significant trade and tariff uncertainty persists, according to BMO.

Canada's Q1 Current Account Deficit Widens Much More Than Expected on Lower Investment Income, Higher Goods Deficit

Canada's current account deficit on a seasonally adjusted basis widened by $6.2 billion to $7.2 billion in Q1, said the country's statistical agency on Thursday.The Q1 deficit was much higher than the $3.9 billion consensus deficit provided by MUFG.This widening of the deficit reflected a reduction in the investment income surplus, as well as an increase in the trade in goods deficit, noted Statistics Canada in a statement. Q1 2026 marked the 15th consecutive quarter in which the current account balance was in a deficit position.The investment income surplus, the difference between income earned on international financial assets and paid on international liabilities, narrowed by $4.9 billion to $2.5 billion in Q1, added StatsCan. This was largely due to a decrease in the direct investment income surplus. Profits earned by foreign direct investors on their assets in Canada, led by the energy and mining sector, increased more in Q1 than those earned by Canadian direct investors on their assets abroad.The trade in goods deficit widened by $3.3 billion to $7.7 billion in Q1, as imports rose at a faster rate than exports. Imports of goods were up 5.5% to reach a record high of $211.0 billion in Q1. The main contributor to this increase was higher imports of metal and non-metallic mineral products (+38.3%), largely gold, as prices for precious metals increased significantly in the quarter.

Job Vacancies Held Steady in March, Increased in Three Sectors and Decreased in Two, adds StatsCan

Brief: Canada's Q1 Current Account Deficit Is 15th Consecutive Quarter Deficit

Month over Month, Average Weekly Earnings ($1,333) Were Little Changed in March, says Statistics Canada

Brief: Canada's Q1 Current Account Deficit Expands to $7.2 Billion; MUFG Says Consensus Saw $3.9 Billion Deficit

Shengtak New Material to Issue 405 Million Yuan in Convertible Bonds

Shengtak New Material (SHE:300881) will issue up to 405.1 million yuan in convertible corporate bonds, according to a Thursday filing with the Shenzhen bourse.The company will issue 4,050,968 bonds with a par value of 100 yuan apiece.Each share will be entitled to 0.037058 convertible bonds based on a ratio of 3.7058 yuan face value convertible bonds per share.

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BMO on The Day Ahead in Canada

Canada will release the current account balance for Q1 at 8:30 a.m. ET on Thursday, said Bank of Montreal (BMO).The late-February outbreak of the Iran war drove prices for key Canadian exports, especially energy, higher, noted the bank. The merchandise trade deficit flipped to surplus in March and looks to continue benefiting as long as activity through the Strait of Hormuz remains restricted.Still, the Q1 shortfall likely widened due to softness in earlier months. Meantime, the services account posted a small deficit following a surplus in the previous quarter.Consequently, BMO expects the current account shortfall to deteriorate to $2.5 billion, or $9.9 billion a.r., in Q1. That would weigh in at a modest 0.3% of gross domestic product, with the latter figure to be released on Friday.Also, investors will get the March data on payroll employment, earnings and hours (SPH), along with job vacancies at 8:30 a.m. ET on Thursday. The growth in payrolls has been steadily slower than the Labour Force Survey's (LFS) employment growth since mid-2023, added the bank. Meanwhile, the vacancy rate was 2.8% in February for the third month in a row.Then at 10 a.m. ET, the Bank of Canada will release the annual Financial Stability Report, followed by a press conference with Governor Tiff Macklem and Senior Deputy Governor Carolyn Rogers at 11 a.m. ET.The US dollar (USD) is firmer (BBDXY +0.18%), with the Canadian dollar (CAD or loonie) softer (CAD per USD +0.21%), added BMO.

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UBS Sees Canada's GDP Growth at 1.5% This Year, at 1.7% in 2027

UBS said it estimates Canada's gross domestic product growth to slow down this year to 1.5% from 1.7% in 2025.The bank estimates a pickup in economic growth in 2027, up 1.7%.UBS sees the consumer price index averaging at 2.6% this year and at 2.4% in 2027, up from 2.1% in 2025.The current account deficit to GDP is predicted to narrow to 0.7% this year and to 0.3% in 2027 versus 0.9% in 2025.The Canadian dollar (CAD or loonie) versus the US dollar (USD) is seen at 1.40 at the end of this year and at the end of 2027.

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