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

The US Treasury's 5-year TIPS auction hit a high yield of 1.955% on Thursday, up from the 1.367% high in the previous auction.The bid to cover ratio for the auction was 2.61, above the 2.57 ratio in the previous auction.Dealers represented 49.26% of the bids, with direct bidders at 14.18% and indirect bidders at 36.75%.For takedown, dealers took 3.43%, with direct bidders at 27.99% and indirect bidders at 68.59%.

Treasury5d ago

US 5-Year TIPS High Yield 1.955% vs 1.367% Previous; Bid/Cover 2.61 vs 2.57 Previous

Treasury5d ago

TD Sees Bank of Canada on Hold This Year as Inflation Expected to Stay Under Control

The Bank of Canada (BoC) is expected to remain on hold through the rest of the year, supported by an economy that continues to operate below capacity and an inflation backdrop that remains relatively contained, TD Economics said Thursday.Expectations global energy-supply conditions will gradually return to normal trends in the next months further reinforce the outlook for subdued price pressures, TD said in a note to clients on Thursday.Unlike the United States, underlying inflation trends in Canada remain "well behaved," according to the bank. The BoC's preferred core inflation measures have averaged around 1.5% annualized over the past six months, sitting below target and suggesting limited underlying inflation momentum.This favorable starting point should give policymakers room to stay on the sidelines for this year, according to TD, noting that markets have already adjusted to this stance as they scaled back expectations for policy tightening in 2026 from three rate hikes as recently as late March to just one.Although policy remains on hold, the Canadian dollar is expected to appreciate in the months ahead, supported by a convergence in policy expectations and a narrowing of Canada-U.S. rate differentials, said the bank.

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Treasury5d ago

International Students Taking Brunt of Canada Immigration Cap; Scotiabank Sees Economic Headwinds

Canada's recent immigration limits are hitting the international student population especially hard, as restrictions have reduced their numbers to well below the government's target, according to Scotiabank Economics.The total stock of study and study-to-work permit holders has declined from a peak of more than 1 million in mid-2024 to just under 620,000 today, as a result of immigration restrictions and a substantial shortfall in international student arrivals, noted the bank in a note on Wednesday."While the decline in the number of temporary work permit holders has been gradual since the introduction of annual temporary permit holder arrival caps, the pace at which the international student population has declined has been rapid, to say the least," Senior Economic Analyst Anthony Bambokian said in the note.Last November, the Canadian government set new immigration targets for temporary residents to lower non-permanent residents as a share of the country's population to 5% by the end of 2027. International student admissions were set at 155,000 for this year, declining to 150,000 in 2027 and the year after.But inflows of new students are muted and there's no signs of and acceleration that would bring the number close to the 155,000 cap, Bambokian said. In the year to April, arrivals are down 42% from 2025 at 16,115, and 84% lower than January-April 2024.Tighter access to permanent residency and greater uncertainty surrounding the renewal of study and work permits could significantly dampen demand for migration to Canada, according to Scotiabank."For a country where virtually the entirety of population growth comes from immigration, these can no doubt lead to significant structural economic issues in the long-run," Bambokian said.

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Treasury5d ago

Canada's Economy to Return to Growth in Second Half After Contraction, TD Economics Says

Canada's economy may see growth momentum return in the second half of the year after posting two consecutive quarterly contractions that raised recession worries, according to TD Economics.A large part of the Q1 0.1% year-over-year contraction was the pullback in government spending, which the bank doesn't expect to continue, it said in a report on Thursday. Household spending is also projected to continue after rising 1.5% quarter-over-quarter in the first three months.In addition, the Statistics Canada flash estimate of monthly GDP revealed a "solid" bounce-back of 0.4% month over month in April."Looking ahead, we expect the economy to continue to gradually regain some momentum," TD said. "International trade data also supports the case for a rebound in April."Job gains in May reversed a large part of the losses posted earlier in the year and reduced the unemployment rate to 6.6%, TD said. The bank expects gross domestic product growth to accelerate to 1.3% year-over-year in Q4 from 0.7% in the same period last year. GDP is estimated to expand further to 1.8% annually in the last quarter of 2027. TD sees the unemployment rate decline slightly to 6.4% by the final quarter of this year."Our go-forward view is contingent on an ongoing improvement in the trade picture, which means that the upcoming CUSMA trade talks are a risk event," TD said, referring to the Canada-U.S.-Mexico trade treaty. Formal talks between the U.S. and Canada haven't started yet and TD doesn't see the review finalized by the July 1 deadline.

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Treasury5d ago

Canadian Small Businesses Point to Increases in Bank of Canada's Inflation Expectations, Says Scotiabank

The Canadian Federation of Independent Business (CFIB), which is an association and lobby group for small firms, released its monthly Business Barometer survey on Thursday, said Scotiabank.CFIB's monthly measure of inflation expectations tends to lead the Bank of Canada's quarterly business outlook survey, or BOS, and is more timely than the BoC's monthly Business Leaders' Pulse, or BLP, survey, stated Scotiabank.The CFIB survey points to the next quarterly BOS measure of inflation expectations in July moving much higher and there is a strong correlation notwithstanding mismatched one- and two-year horizons, added the bank.The CFIB measure tends to track beneath the BLP monthly measure, which suggests that the BLP measure of one-year-ahead inflation expectations could remain elevated with upward pressure, according to Scotiabank.

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Treasury5d ago

Canada's Product Prices in May Rise for The Fifth Month in A Row as Middle East Conflict Impacts Commodity Markets

Prices of products manufactured in Canada, as measured by the Industrial Product Price Index (IPPI), were up 1.2% month over month in May and increased 13.6% year over year, said the country's statistical agency on Thursday.The IPPI's May rise marked the fifth consecutive monthly increase. Disruptions to shipping through the Strait of Hormuz continued to affect global commodity markets in May, reflecting impacts on crude oil costs and supply chains since March, noted Statistics Canada in a statement.This situation contributed to price increases across various commodity groups, including chemical and chemical products, energy and oil products and primary non-ferrous metal products, StatsCan added.Excluding energy and oil products, the IPPI increased 0.9% month over month.May's 1.2% month-over-month climb was less than the 2.5% month-over-month increase expected by Bank of Montreal.Prices of raw materials purchased by manufacturers operating in Canada, as measured by the Raw Materials Price Index (RMPI), increased 0.7% month over month and rose 33.4% year over year, said the Ottawa-based agency.Data collected from this survey are used to produce two key measures of price change for the Canadian economy: the IPPI and the RMPI. The IPPI measures price movements for products sold by manufacturers in Canada, and the RMPI measures price movements for raw materials purchased by manufacturers in Canada. Data for about 6,000 products are used to produce the IPPI and RMPI.The IPPI and RMPI are used extensively by businesses for contract escalation and industry analysis. StatsCan uses these indexes to deflate current dollar values and derive estimates of real growth and productivity for the manufacturing sector.

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Treasury5d ago

Brief: Canada's Raw Materials Price Index Rises 0.7% M/M in May

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Treasury5d ago

Brief: Canada's Industrial Product Price Index Adds 1.2% M/M in May; BMO Saw 2.5% M/M Gain

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Treasury5d ago

Canada's Small Businesses Staying Downcast in June, CFIB Business Barometer Shows

Small business confidence in Canada saw virtually no change in June, with the index remaining below the 50-point mark that for a second month in a row, said the Canadian Federation of Independent Business (CFIB) Business Barometer published on Thursday.A reading below 50 means business owners expecting a weaker performance over the next three or 12 months outnumber those expecting stronger performance, the CFIB said.Fuel remains the top cost constraint for 66% of small businesses, while weak demand continues to weigh on more than half, or 53%, of the firms, CFIB said. The share of businesses reporting challenges with capital equipment and technology costs has steadily climbed over the past two and a half years, reaching 38% of small firms."Although early signs from abroad suggest the worst of the fuel shock may be behind us, many consumers and businesses remain under strain, and the outlook is still uncertain," said Simon Gaudreault, CFIB chief economist and vice-president of research, in a statement.Price plans have held near the 3% mark for three consecutive months, which is the upper end of the Bank of Canada's inflation target range, added the CFIB.Hiring plans remain "muted" even coming into the busy summer tourist reason, CFIB said. Some 12% of small firms are planning to hire full-time staff and 11% planning to take on part-time employees over the next three months, the group said.

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Treasury5d ago

BMO on The Day Ahead in Canada

Canada will release the May producer prices at 8:30 a.m. ET on Thursday, said Bank of Montreal (BMO).The bank is calling for another 2.5% increase in the month, although this may be a bit dated given the slump in energy prices so far in June.If peace holds between the United States and Iran and stability continues in energy markets, the inflation concerns will turn to monitoring how much of this shock will persist and/or permeate to other goods, pointed out BMO in a note.So far, consumer prices have "behaved surprisingly well" when excluding energy, but the bank added it will know more when the May report is out next week.The US dollar (USD) index (+0.6%) continues to climb while the Canadian dollar (CAD or loonie) has weakened to $1.412 (70.8 cents US) early Thursday, according to BMO.

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Treasury5d ago

Canada's Population Pop Continues to "Fizzle Out," BMO Says

Canada's population continued its "historic" decline in Q1, Bank of Montreal (BMO) said in a note Wednesday.As of April 1, the number of people in the country fell 0.5% from a year ago, "extending a half-year period marking the first population slump since Confederation" in 1867, the bank wrote in a note on Wednesday.This follows a "well-telegraphed boom" that saw population growth peak at over 3% year over year on the back of significant post-pandemic inflows, Senior Economist Shelly Kaushik said in the note. Median yearly growth has been just over 1% in the last five decades, BMO said.Kaushik expects growth to stabilize as immigration targets return to past trends in the coming years. "Immigration will remain the most important source of population growth as structural factors -- specifically, aging demographics and low fertility -- put natural population on a path towards declining starting as soon as 2028," she said in the note.According to the economist, slower population growth suggests weaker potential economic growth, lower break-even job growth -- although artificial intelligence could supplement lost output -- and less demand for housing and other services. However, it also points to more strain on social security, health care and other government programs, BMO said.

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Treasury5d ago

Commerzbank on Overnight News

Commerzbank in its "European Sunrise" note of Thursday highlighted:Markets: United States Treasuries fall after the Federal Reserve decision on Wednesday, with the curve flattening, partly reverse losses in Asia. E-minis only changed a little after rebounding in Asia. The euro (EUR) falls to US$1.152, the yen (JPY) is at its weakest level in nearly two years. Brent at US$78/barrel.Fed keeps rates unchanged, removes reference to additional rate adjustments and drops easing bias in statement. Median 2026 rate dot rises to 3.75% from 3.375%, with nine of 18 participants penciling in a hike this year. Core PCE projection for this year raised to 3.3%, followed by 2.3% for 2027 and 2% for 2028. The statement says the labor market is keeping pace with workforce.Fed: Chair Kevin Warsh says committee dropped forward guidance as it is "not well suited to this juncture." Announces five task forces (communications, balance sheet, data sources, productivity/jobs, inflation frameworks) that will begin to work within weeks and mostly conclude by year-end. Balance sheet task force to review ample-reserves regime. Sees no reason to revisit 2% target until achieved.Trade: President Donald Trump says the USMCA trade deal "won't be sticking around," views it as possibly expiring immediately.U.S.: Wall Street groups warn regulators that their plans to implement "Basel Endgame" will threaten U.S. Treasury market liquidity (FT).U.S./Iran: President Trump signs the memorandum of understanding with Iran at Versailles and the deal is now in effect. Trump reiterates that Iran agreed not to produce nuclear weapons and talks on removing the enriched stockpile will begin immediately. The U.S. will only lift oil sanctions if Iran complies. If Tehran doesn't honor the agreement, the U.S. goes "back to bombing." Trump defends deal, saying that he sought to avoid "economic catastrophe" and "market collapse."U.S./Iran: Official briefs that the deal gives the U.S. a "dial" tied to Tehran's behaviour, Iran won't charge fees for Strait of Hormuz transit within a 60-day period.

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Treasury5d ago

Population Declines Reshaping Canada's Labor, Housing Market, National Bank Says

Estimates from Q1 confirm that Canada's population declined for a third consecutive quarter, which National Bank of Canada said is an "unprecedented development that underscores the impact of the government's shift in immigration policy."Canada shifted to reduce the share of non-permanent residents, or NPRs, to below 5% of the population, "a level broadly consistent with conditions that prevailed before 2023," the bank said in a note Wednesday.Data from Statistics Canada show that's on track, National Bank said. "The share of NPRs has already fallen significantly from its 2024 peak and, if the current pace is maintained, could fall below the government's target before the end of 2027," Deputy Chief Economist Matthieu Arseneau and Senior Economist Daren King said in the note.Demand pressure on housing has eased with rents declining and home prices falling across much of the country, the economists said. Unemployment among non-permanent residents has also improved, they added.Still, changes in immigration policy come with costs, National Bank said. "Beyond the human consequences for some individuals required to leave the country, rapid population expansions followed by abrupt contractions complicate hiring decisions, business planning and activity in some economic sectors."

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Treasury5d ago

SocGen's Overnight Economic News Summary

Societe Generale in its early Thursday economic news summary pointed out:US dollar (USD) is bid, two-year United States Treasury yield spikes to 4.21% after hawkish FOMC, three-month SOFR pricing +25bps in October. Brent -2.2% to US$77.8/barrel erases 200dma, support is US$75/US$73. The U.S. and Iran sign a 14-point memorandum of understanding, agreement aims to expand on ceasefire, reopen the Strait of Hormuz. Details sketchy on nuclear, lifts sanctions so Iran can sell oil, access frozen assets, US$300 billion funding.Fed: hawkish hold, nine of 18 FOMC members want a rate hike in 2026, six want two hikes or more. Emphasis on price stability. Chair Warsh: "unambiguously and unanimously" committed to bringing inflation back to the 2% target. PCE raised to 3.6% in 2026 (+0.9pp), 2.3% in 2027 (+0.1pp), 2.0% in 2028 (unchanged). Unemployment rate 4.3% in 2026 (-0.1pp), 4.3% in 2027 (unchanged).Switzerland: The central bank (SNB) on hold at 0%, repeats increased willingness to intervene in foreign exchange markets to counter rapid and excessive appreciation of the Swiss franc (CHF). Inflation forecast 0.6% this year and in 2027, 0.7% in 2028, within the range of price stability.United Kingdom April average earnings excluding bonuses unchanged at 3.4% three-month/over/year-on-year, above forecast. Private sector pay slows to 2.9% from 3.1%. May payrolls +2,000, April revised up to -53,000. Unemployment rate -0.1pp 4.9%.Day ahead: Bank of England forecast to stay on hold. Norway's Norges Bank keeps rates unchanged. European Central Bank speakers Kocher, Nagel, Cipollone, Lane, Escriva. U.S. weekly jobless claims and Philly Fed business outlook. Czech central bank forecast to raise rate by 25bps 3.75%.Nikkei +1.7%, EUR 10-year IRS unchanged at 2.975%, S&P futures +0.8%, Gold -1.2% at US$4,305/oz.

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Treasury5d ago

US Treasury Closing Levels

3:00 Wednesday vs 3:00 Tuesday2yr 99-22 vs 99-29; 4.163% vs 4.045%5yr 99-17 vs 99-28; 4.229% vs 4.149%10yr 99-09 vs 99-18+; 4.461% vs 4.426%30yr 101-04+ vs 101-03+; 4.923% vs 4.927%2/10 29.580 bps vs 37.825 bps5/30 69.293 bps vs 77.641 bps

Treasury6d ago

Berenberg Assesses the Economic Impact of The U.S.-Iran Deal

In their framework agreement to be signed on Friday, Iran and the United States have apparently left some key issues unresolved, said Berenberg.Examples seem to include the dilution or disposal of Iran's highly enriched uranium, the Israel/Lebanon issue, some details of long-term sanctions relief for Tehran and, possibly, the precise arrangements for managing the Strait of Hormuz in the future.However, chances are that both sides will want to avoid the pain of a new prolonged closure of the Strait of Hormuz, U.S. President Donald Trump probably even more so than Iran, noted the bank. A collapse of the deal, followed by a renewed surge in oil prices, could hurt Trump's Republicans badly at the midterm elections to Congress on Nov. 3.The structure of the deal, with a 60-day period for further negotiations, should make it easy to simply extend the deadline further and further if the two sides cannot settle their differences in time.Since late April, Berenberg has based its economic and financial forecasts on the assumption that the worst would be over by June. More precisely, the bank suggested that the price for dated Brent crude would fall from an average of US$120 per barrel in April to around US$90 in June and further to US$75 in January 2027.Berenberg now seems to be on track for that. Futures prices have receded to be roughly in line with the bank's oil price assumption. As a consequence, it sees no need to revise its economic or financial forecasts.For the last three months, Berenberg has argued that bond markets have overreacted to the surge in energy prices. Central banks won't tighten policy as aggressively as markets are pricing in.Unlike in 2021 and 2022, when the combination of an ultra-loose monetary policy and a V-reshaped economic rebound from the pandemic had paved the way for a major surge in inflation even before Russian President Vladimir Putin had launched his full-scale invasion of Ukraine, the potential for major second-round effects from the spike in energy prices and transport costs is low, added the bank.

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Treasury6d ago

The Canadian Dollar May Swing on USMCA Trade Review News, Says Rosenberg Research

U.S. President Trump's announcement last week that the United States will not renew the USMCA trade deal wasn't especially surprising, said Rosenberg Research.The agreement would remain in force until 2036, but the decision would trigger annual review periods, and it fits neatly within the U.S. administration's broader strategy of maximizing negotiating leverage, noted Rosenberg Research.USMCA is proceeding with a mandatory joint review, starting this July. The USMCA talks so far are showing minimal progress, with U.S. officials framing Canada as non-responsive. Changes to rules of origin, and specifically questions about the Chinese content of goods, have been a major theme of the negotiations.With their USMCA-compliance exemptions shielding them to some extent from the Section 301 tariffs, Canada and Mexico continue to have a competitive advantage relative to most other exporters in the U.S., providing some insulation from U.S. trade policy volatility.However, there are still vulnerabilities, stated Rosenberg. A U.S. refusal to renew the deal would leave the USMCA in force, but the reversion to an annual, rather than six-year, review process, and the exposure to mercurial swings in U.S. trade policy, would also present a sustained overhang that would weigh on international direct investment and domestic investment trends in Canada, with potential spillover effects on trade and employment.Canada's economy remains cyclically battered by the events of the last year and a half, along with poor structural growth to begin with. Jobs data has been volatile, with the May numbers showing a drop in unemployment from 6.9% to 6.6%, but the employment growth trendlines have been very poor over the last year, pointed out Rosenberg.For Canadian assets, the new reality is clear. Rosenberg expects some heightened market sensitivity for the Canadian dollar, and in particular, there is a "skew" to the potential market moves.Sudden setbacks in the negotiations will cause downside jumps in the loonie, while any gains will be incremental, according to Rosenberg.

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Treasury6d ago

Lower Oil Prices Reduce Market Expectations of Central Banks Rate Hikes, Including Canada, Says BMO

Many fixed-income markets have been "rigidly" trading almost tick-for-tick with oil prices since the Iran conflict began, said Bank of Montreal (BMO).In turn, this implies that markets had been pricing in much higher odds of rate hikes in a variety of economies,including the United States and Canada, until now, noted the bank.While not completely washed away just yet, the pullback in oil is steadily grinding down those rate-hike expectations as broadly captured by two-year Government of Canada (GoC) bond yields, stated BMO.The bank's view is that those rate-hike expectations should eventually fully be erased, at least in Canada, should oil prices stay down. Gross domestic product and hours worked have both dropped over the past year, core inflation is on target at 2%, and USMCA trade review uncertainty lingers.That's no environment for rate hikes, added BMO.

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Treasury6d ago

Teranet-National Bank House Price Index Signals Canada Prices Continue to Fall

The Teranet-National Bank Composite Index declined for the sixth consecutive month in May, with Canadian home prices falling 1.0% on a month-over-month basis, said National Bank of Canada on Wednesday.This cumulative decline amounts to 4.0% over the past six months and 4.3% over the past year, the bank added, noting the continued decline in prices in May comes amid a context where transaction volumes in the resale market remain depressed relative to their historical average.But, the bank said, home sales in the resale market have rebounded over the past two months, a recovery that could continue in the coming months thanks to the recent improvement in consumer confidence and the labor market.Real estate market conditions have also tightened in several regions, although they remain relatively loose for now in Toronto and Vancouver, National Bank noted. "We therefore expect these markets to gradually stabilize over the coming months and may even see price increases by the end of the year," the bank said.It turns out, the bank added, that prices in real terms have experienced significant corrections from their 2022 peaks in these two major markets, leading to a notable improvement in affordability. "This improvement in accessibility, which has been pronounced over the past year, could be one of the factors behind the recent rebound in transactions in the resale market."However, several factors could limit the extent of this recovery and constrain price growth, including demographic decline, fixed mortgage rates that remain high and have risen sharply since February, and uncertainty surrounding the renewal of the USMCA, according to the bank.

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Treasury6d ago

The Canadian Dollar May Swing on USMCA Trade Review News, Says Rosenberg Research

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