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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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US 10-Year Treasury Yield Rises 1.9 Basis Points to 4.5%, Two-Year Rate Climbs 2.9 Basis Points to 4.06% Early Thursday

US Treasury Yields Rise Pre-Bell as Investors Await Fed's Preferred Inflation Data Amid Renewed Tensions in Iran

Commerzbank on Overnight News

Commerzbank in its "European Sunrise" note of Thursday highlighted:Markets: United States Treasury yields open higher in Asia, continue to increase with the 10-year back above 4.5%. Brent surges to US$98/barrel after U.S. strikes on Iran. Asian equity indexes and U.S. futures are down. The euro (EUR) drops below US$1.159.Fed: Federal Reserve Governor Lisa Cook is prepared to raise rates if inflation doesn't ease as expected. Minneapolis Federal Reserve President Neel Kashkari says inflation fight takes priority and unanchored expectations could require stronger policy action. Federal Reserve Vice Chair Philip Jefferson warns of inflation from energy price increases.U.S.: Treasury Secretary Bessent believes prices are "transitory;" expects oil to be lower than pre-conflict levels when it ends.Iran war: U.S. carries out strikes against Iranian military site. President Donald Trump says "we're not satisfied with Iran deal," warning that if negotiations fail U.S. may "finish the job."==EUROPE:ECB: European Central Bank Governing Council member Philip Lane warns that inflation could remain elevated even after Iran conflict ends.EU broadens import quotas and tariffs against China. Plans a strategy to reduce reliance on U.S. tech companies.

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Surge In Population Between 2022 and 2024 Has Led To Recent Rise In Canadian Youth Unemployment, says BMO

Bank of Canada Deputy Governor Nicolas Vincent's speech on Tuesday fretted about the rise in the country's youth unemployment, says Bank of Montreal (BMO).Vincent cited a variety of factors, including structural issues like Artificial Intelligence and United States tariffs -- which, he suggested the BoC couldn't do much to address withmonetary policy, noted the bank.But Vincent also mentioned: "Between 2022 and 2024, there was a large influx of young people from abroad. This intensified competition in Canada for lower-skill and entry-level jobs." That seems to be the dominant factor at work here.The youth jobless rate was actually pressing all-time lows of around 9% in 2022, until the surge in population took hold, noted BMO.The number of people aged 15-24 increased by almost 12% in a two-year period, more than triple the growth rate seen at any time for that group in the past 50 years. Meantime, the population of those aged 45 or over saw steady growth through that episode, noted the bank.

SocGen's Overnight Economic News Summary

Societe Generale in its early Thursday economic news summary pointed out:Brent, bond yields rebound up after renewed United States strikes around the Strait of Hormuz, Iran's IRGC targets U.S. airbase. President Trump dismisses pressure from the mid-term elections to strike a deal. U.S. Treasury 2s/10s flips from bull to bear flattening, Germany's Bund reclaims 3.0%, resistance 3.03%.Federal Reserve's Cook: I am prepared to raise rates if the expected disinflation doesn't appear in timely manner. Fed's Jefferson: monetary policy well positioned to respond to economic developments based on incoming data, the evolving outlook and balance of risks.Bank of Korea hawkish hold, keeps key rate at 2.50%. Governor Shin: need for a rate hike at the appropriate time. USD/KRW +0.2% at 1,503.Day ahead: U.S. PCE, SocGen forecasts headline 0.6% month over month (4.0% year over year), core 0.3% month over month (3.3% year over year). Weekly jobless claims, durable goods orders, Q1 gross domestic product second read. Fed speakers Williams, Musalem, Barkin. European Central Bank's Lane, Lagarde, Cipollone, Schnabel. ECB accounts of the April meeting. Italy benchmark auction. Bank of England's Breeden. South Africa's SARB forecast to raise rates by 25bps.Nikkei -0.5%, EUR 10-year IRS +2bps at 3.04%, Brent crude +2.8% at US$97.1/barrel, Gold -1.4% at US$4,391/oz.

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Market Chatter: China to Issue 6 Billion Yuan Inaugural Green Sovereign Bonds in Hong Kong

The Chinese government is issuing as much as 6 billion yuan in green sovereign bonds in Hong Kong on Thursday, Bloomberg reported the same day, citing a person familiar with the matter.China's finance ministry set the guidance for the three-year bonds at a yield of 1.85% and the five-year bonds at 2%, the report said, citing a source.The renminbi-denominated debt will be the Chinese government's first green bond issuance in Hong Kong after pledging in March to expand international ESG funding, Bloomberg said.(Market Chatter news is derived from conversations with market professionals globally. This information is believed to be from reliable sources but may include rumor and speculation. Accuracy is not guaranteed.)

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Truist Financial to Redeem Senior Notes due 2027

Truist Financial (TFC) said late Wednesday it will redeem all $1.50 billion of its fixed-to-floating rate senior notes due June 8, 2027, on the redemption date of June 8, 2026.The redemption price will be equal to 100% of the principal amount, the company said.

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US Treasury Closing Levels

3:00 Wednesday vs 3:00 Tuesday2yr 99-30 vs 99-14; 4.031% vs 4.047%5yr 98-21 vs 98-20; 4.172% vs 4.183%10yr 99-05+ vs 99-02; 4.477% vs 4.491%30yr 99-27 vs 99-19; 5.009% vs 5.025%2/10 44.394 bps vs 44.178 bps5/30 83.336 bps vs 84.160 bps

US 5-Year Auction High Yield Rises From Previous Month, Demand Slightly Higher

The US Treasury's 5-year auction hit a high yield of 4.182% on Wednesday, up from the 3.955% high in the previous auction.The bid to cover ratio for the auction was 2.34, above the 2.33 ratio in the previous auction.Dealers represented 54.58% of the bids, with direct bidders at 7.88% and indirect bidders at 37.53%.For takedown, dealers took 12.80%, with direct bidders at 12.34% and indirect bidders at 74.85%.

US 5-Year High Yield 4.182% vs 3.955% Previous; Bid/Cover 2.34 vs 2.33 Previous

Canada's Credit Stress Is Rising, Not Breaking, Says National Bank

Total debt insolvency in Canada reached its highest level since the 2009 financial crisis in Q1, according to data from Equifax released on Wednesday, said National Bank of Canada.This increase may seem alarming and raises concerns about the financial health of Canadian households. The bank asks if the situation is really as concerning as it seems.To gain a clearer picture, National Bank analyzed data from the Office of the Superintendent of Bankruptcy, which tracks the total number of insolvency filings; bankruptcies and consumer proposals, across the country. This data also shows that the number of insolvencies reached its highest level since the financial crisis in Q1.However, two adjustments are necessary to correctly interpret the trend in insolvencies, stated the bank. The first concerns seasonality, since the first half of the year is historically associated with a higher volume of insolvencies.The second involves accounting for the strong population growth observed since 2009, as the Canadian population has increased by about 25% over the period.Once the data is seasonally adjusted and expressed on a per capita basis, the insolvency rate remains well below the peak reached in the wake of the financial crisis and is even below its pre-pandemic level of 2019, the bank pointed out.The upward trend observed since 2022, as such, reflects a normalization from an exceptionally low pandemic trough rather than a widespread breakdown in household credit. However this does not mean the situation should be downplayed.The rise in the insolvency rate over the past year reflects a more fragile labor market, high interest rates, and a still-high cost of living, particularly for housing, food, and energy, which continue to put pressure on many households.However, the data doesn't support the narrative of systemic credit risk suggested by some media headlines, added the bank. The most accurate interpretation remains more nuanced: financial strains are increasing, but their magnitude remains moderate by historical standards for now.

US 2-Year FRN Auction High Discount Margin Falls from Previous Month, Demand Lower

The US Treasury's 2-year FRN auction hit a high discount margin of 0.089% on Wednesday, lower than the 0.103% high in the previous auction.The bid to cover ratio for the auction was 3.49, below the 3.52 ratio in the previous auction.Dealers represented 65.75% of the bids, with direct bidders at 0.20% and indirect bidders at 34.05%.For takedown, dealers took 26.84%, with direct bidders at 0.71% and indirect bidders at 72.44%.

US 2-Year FRN High Discount Margin 0.089% vs 0.103% Previous; Bid/Cover 3.49 vs 3.52 Previous

Bank of Canada Cannot Fix Youth Unemployment, Notes BMO

In a Tuesday speech, Bank of Canada Deputy Governor Nicolas Vincent highlighted the rise in long-term unemployment, especially for those aged 15-24 years, said Bank of Montreal (BMO).The share of the labor force in that age group who have been out of work for a year or more has risen to 1.6%. That's approaching the peaks hit in the wake of the 1982 and 1991 recessions, and is triple the long-run average, noted the bank.It's a very different story for those 25 and over, where the long-term jobless rate is 0.8%, which is right on the long-term average for that age group, stated BMO.Vincent explained that the rise for young people was due to demographic factors, the population surge in 2022-24,cyclical forces as young people are hit first in slowdowns, and structural issues such as employer caution around the implications of Artificial Intelligence.The key message in the speech is that the BoC needs to sort out what the main driver is, and can't just respond with lower rates immediately to such softness, added the bank.

Comcast Starts Tender Offers for Some Notes

Comcast (CMCSA) said Wednesday it has commenced cash tender offers to buy its notes maturing between 2027 and 2030, including 2.350% notes due 2027 and 2.650% notes due 2030.Comcast Cable Communications, a subsidiary of Comcast, has also started separate cash tender offers to purchase its 8.500% notes due 2027 and 7.125% notes due 2028, the firm said.Price: $25.78, Change: $+0.63, Percent Change: +2.50%

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CIBC Sees Better Growth in Canada to Narrow Provincial Divergences in 2027

Canada's provinces have seen widely divergent fortunes over the past two years, but an improving picture in 2027 should also narrow some of those performance gaps, said CIBC.The balance of this year will see winners and losers from an oil price shock, and some provinces hit by more meaningful headwinds from trade frictions and housing market weakness, writes the bank in a note to clients.Provinces have varying degrees of labor market slack that leaves ample room for growth without threatening an acceleration in inflation, stated CIBC.Housing market activity will continue to be a major source of growth differentiation for provinces, with building still expected to remain weak this year as supply excesses in the condo space and economic uncertainty weigh on activity, pointed out the bank.2027 could see a return to faster rates of building, with per-capita housing starts expected to rise sharply in Ontario after falling for several years, and to a lesser extent in British Columbia, where building was already robust relative to the population, added CIBC.In the near-term, there is scope for some upside and downside surprises versus what provincial budgets assumed for growth this year. There is material fiscal upside for oil-producing provinces, even if crude prices begin to descend in the next few months, while B.C. budget assumptions may have been a touch optimistic, according to the bank.A challenging 2026 will see some other provinces lagging behind forecasts made at budget time, due to the oil price shock, trade frictions, and housing market weakness. But by 2027, at least some tariff relief and lower uncertainty coming out of the trade talks, and an end to the Middle East conflict, could allow provinces that are now lagging to narrow those gaps, it noted.

Market Chatter: Canada Negotiating Purchase of Aerial Surveillance System with Swedes Instead of American Competitor

In front of a packed room of Canadian corporate defence and security leaders, Prime Minister Mark Carney announced that Canada has entered negotiations to procure GlobalEye, an advanced aerial surveillance system developed in Sweden that uses Canadian-made jets, Canada's CTV National News is reporting Wednesday.The GlobalEye is an airborne warning and control system (AEW&C) created by Swedish defence and security company Saab. The radar system is integrated into Bombardier's Global 6500, transforming the corporate jet into a cutting-edge surveillance aircraft, the report notes.The federal government is negotiating a deal that would see at least one third of the projected fleet of the GlobalEye aircraft manufactured in Canada over the next 15 years, it adds(Market Chatter news is derived from conversations with market professionals globally, and/or from other media sources. This information is believed to be from reliable sources but may include rumor and speculation. Accuracy is not guaranteed.)

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Canada Negotiating Purchase of Aerial Surveillance System with Swedes Instead of American Competitor, CTV News reporting