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Rosenberg Research Notes Market Implications From Bank of Canada's Policy Decision This Week

The Bank of Canada is expected to leave its policy rate unchanged at 2.25% on Wednesday, with markets continuing to price in one 25 basis points rate hike before year-end, said Rosenberg Research.That one rate hike for 2026 is down from three rate hikes during the early days of the crisis in the Middle East, noted Rosenberg Research.Markets, however, still look for the BoC to ultimately raise its policy rate two to three times, with the one-year forward, one-month (1Y1M) OIS rate just below 3.00%, stated Rosenberg.As a consequence, the profile for rate hikes has been pushed forward, but the number of moves has remained unchanged, it pointed out.Despite any possible currency concerns, the risks lean toward Canada's central bank coming across as more dovish relative to market pricing of rate hikes before year-end, with room for short-term Canadian bonds to rally, added Rosenberg.The Canadian dollar (CAD or loonie) seems likely to remain under downward pressure, with a focus on the 2026 low and $1.4000 after, according to Rosenberg.

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Treasury61d ago

TD Notes Canada's Regional Divergences in Household Wealth

Household wealth reached record or near-record levels across Canadian provinces last year, said TD.However, important regional differences reveal nuances in the level of financial resilience, writes the bank in a note to clients.Strong gains in financial assets helped support spending in 2025, partially offsetting softer labor markets and slower income growth and acting as a financial bridge for households, stated TD.Household leverage, as measured by debt-to-income ratios, declined across most provinces since the COVID-19 pandemic, except for in Ontario and Prince Edward Island, pointed out the bank. Ontario now has the highest leverage in the country, leaving households more exposed to higher borrowing costs and future economic shocks.Developments in household balance sheets often draw attention, but scratching beneath the aggregate picture reveals provincial differences, added TD. In 2025, financial wealth gains were more closely correlated with spending than they have been over the long term, where income remains the dominant driver.This suggests that households may have been drawing on financial wealth gains to help bridge slower income growth. The growing role of financial assets may partly reflect the absence of stronger traditional drivers of spending, particularly housing and income growth.Another commonly watched element of household balance sheets in Canada is leverage. Higher leverage makes households more sensitive to interest rates and vulnerable in the event of an income shock.Most provinces have seen leverage decline, but Ontario stands out. As a consequence, provincial differences in leverage remain a key factor to watch when assessing household resilience, noted the bank.In provinces where debt-to-income ratios remain elevated, households are likely to remain more sensitive to higher borrowing costs and weaker housing conditions. By contrast, provinces with more contained leverage and stronger balance sheet improvement may be better positioned to sustain consumption growth even in a slower economic environment.These differences may become increasingly important as provincial economies navigate a period of softer growth, still-elevated borrowing costs and a housing market that remains subdued across much of Canada, according to TD.

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Treasury61d ago

Canada's Widening Merchandise Trade Surplus Helps Reduce Recession Chatter, Says BMO

Canada's merchandise trade surplus widened to $2.7 billion in April from $1.8 billion in the prior month, said Bank of Montreal (BMO) after Tuesday's data.That marks back-to-back months in surplus, with April's reading the largest since the start of 2025, noted the bank. The spike in oil prices is doing the heavy lifting here.Exports rose 1.6% month over month in April after popping more than 10% in the prior month, on the back of higher energy prices. Energy exports, after surging 23% month over month in March, rose a further 9.7% in April, but that increase was partly offset by a sharp pullback in metals -- mainly gold -- exports after a few months of outsized strength.Meantime, imports rose a modest 0.3% month over month in April as broad gains across a number of categories were offset by a pullback in metals -- mainly gold, again.By region, exports to the United States grew for a third consecutive month, while those outside the U.S. pared recent gains, though this mostly reflects price swings -- for example, a pullback in the value of gold exports to the United Kingdom.In volume terms, exports edged up 0.2% month over month in April with solid gains across most categories offset by a slide in metals. Import volumes dipped 0.1%, which leaves a second straight monthly improvement in the real trade balance.Another improvement in net export volumes leaves trade on track to add to real gross domestic product growth in Q2 after a deep carve in Q1, added the bank.That would help quiet some of the recession chatter if it holds, along with the solid early read on April GDP, according to BMO.

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Treasury61d ago

Canada's Trade Surplus in April Is Positive for GDP, Says CIBC

Canada's trade surplus in goods widened further in April, helped not only by higher oil prices but also by an increase in export volumes, said CIBC after Tuesday's release of the international merchandise trade data.The $2.72 billion surplus in April was wider than the $1.75 billion in the prior month but broadly in line with consensus expectations of $2.55 billion, noted the bank.Total exports rose by 1.6% month over month, driven by energy products, food and autos. Export growth would have been stronger were it not for a pullback in the volatile gold trade, stated CIBC.Excluding the two volatile areas of energy and metal/non-metallic minerals, exports were up by 5.1% and total exports saw another solid increase in volume terms. Total imports edged up slightly in both nominal and volume terms.The solid increase in export volumes is positive for monthly and quarterly gross domestic product, although the strong advance estimate for April GDP will likely have already included most -- if not all -- of that information, added CIBC.

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Treasury61d ago

Canada's Merchandise Trade Surplus Widens as Expected; Surplus With U.S. Expands to Largest Level Since February 2025

Canada's merchandise trade surplus with the world widened to $2.7 billion in April from $1.8 billion in March, as exports rose 1.6% month over month, while imports edged up 0.3% month over month, said the country's statistical agency on Tuesday.This was the second consecutive monthly trade surplus, and the largest since January 2025, wrote Statistics Canada in a statement.April surplus was roughly in line with a $2.50 billion consensus surplus provided by MUFG.Exports of energy products rose 9.7% month over month in April. This followed an increase of 23.4% in March. Both monthly increases were driven by higher prices, which continued to rise in April amid the uncertainty caused by the conflict in Iran, added StasCan.Canada's merchandise trade surplus with the United States widened from $7.8 billion in March to $9.5 billion in April, the largest surplus since February 2025. Exports to the U.S rose 4.8% month over month in April, while imports from the U.S. were up 1.6%.Canada's trade deficit with countries other than the U.S. widened from $6.0 billion in March to $6.8 billion in April as exports fell 4.8% month over month in April and imports from countries other than the U.S. decreased 1.5%.

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Treasury61d ago

Brief: Canada's Trade Surplus With The U.S. Widens to $9.5 Billion in April; Largest Surplus Since February 2025

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Treasury61d ago

Brief: Canada's International Merchandise Surplus Expands to $2.7 Billion in April; MUFG Says Consensus Saw $2.50 Billion Surplus

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Treasury61d ago

BMO Focuses on Canada's Jobless Rate, Youth Unemployment Rate

After the Canadian economy was officially declared not yet to be in recession, the May Labour Force Survey (LFS) hammered home the point, said Bank of Montreal (BMO).The labor market has been a source of weakness for the economy, partly due to extreme swings in the post-pandemic population growth, noted the bank.The unemployment rate has been hovering in the high-6% range for most of the past two years: reflecting some slack, but not as high as BMO would expect in a typical recession.The May improvement -- down three tenths to 6.6% -- still doesn't change that story, stated the bank.In the months to come, BMO advises watching the youth jobless rate: it slid almost a percentage point from April, but is still double the national rate. This is the demographic that's been the most exposed to the swings in labor supply, so Canada should see further improvement ahead.

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Treasury61d ago

Municipal Bond Offerings This Week See High Flood and Hurricane Risk Scores

Multiple municipal bond offerings this week have a high exposure to climate risk, specifically high Flood Risk and Hurricane Risk Scores, according to ICE Climate Data.A $7 million offering from Ellicottville Central School District, N.Y., records a Flood Risk Score of 5.0 out of 5.0, ICE reports. Locations with a component Physical Climate Risk Score, which includes Flood, Wildfire and Hurricane, of 2.0 or higher out of 5.0 indicate high physical climate risk due to hurricane, flooding, or wildfire events.A $195 million bond deal from Cape Coral, Fla., has a Hurricane Risk Score of 4.2 out of 5.0 on ICE's scale, while a $14 million tranche from Fort Edward Union Free School District, N.Y., records an Acute Physical Risk Score of 4.6.Separately, a $56 million offering from Needville Independent School District, Texas, records a Combined Physical Risk Score of 5.0, and a $27 million deal from Indian River County, Fla., has a Combined Physical Risk Score of 4.3, due to their proximity to weather-related events, according to ICE Climate Data.This content is created byand includes certain data sourced from ICE Climate Data ("ICE"). Views ofdo not necessarily represent the views of ICE. ICE is not a nationally registered statistical rating organization, nor should this commentary be construed to constitute an assessment of the creditworthiness of any company or financial instrument or as providing investment advice. Climate analytics available from ICE are meant to be generally indicative of overall feature sets but should not be considered an analyst's opinion of the underlying investability of a particular location or security.The ICE Climate Risk Score is a singular, 0.0-5.0 assessment score that blends all the ICE Spatial Intelligence Platform's climate hazard models together into one rigorous, relative measure of total property risk from physical climate hazards to a given location or set of locations related to the investment. To learn more about the ICE Climate Risk Data, visit: ICE Sustainable Finance Data (https://www.ice.com/data-services/sustainable-finance-data/disclaimer)

Treasury61d ago

BMO on The Day Ahead in Canada

Canada is slated to release its international merchandise trade data for April at 8:30 a.m. ET on Tuesday, said Bank of Montreal (BMO).The bank notes that the trade balance is "ground zero" for the impact of the dual tariff and energy price shocks on the economy. For April, BMO expects the surplus to clock in at $2.0 billion, little changed from the previous month.Oil prices took another step up in the second month of the Iran war, while natural gas prices nudged lower. Meantime, a solid manufacturing flash -- even after accounting for higher prices -- points to firmer imports and non-energy exports.A softer Canadian dollar (CAD or loonie) raises the value of US dollar-denominated imports and exports.Looking ahead, higher energy prices will continue to buoy the surplus, but weaker non-energy demand and ongoing tariff uncertainty remain significant headwinds, stated BMO.The US dollar (USD) is weaker (BBDXY -0.25%), with the loonie stronger (CAD per USD -0.15%) early Tuesday, according to the bank.

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Treasury61d ago

Few Canadians See AI at Work Impact as Significantly Positive, With Many Worrying Over Downsides, Finds Survey

New data from the non-profit Angus Reid Institute finds lukewarm assessments from Canadian workers on whether Artificial Intelligence (AI) has been a boon to productivity or work quality as it has proliferated.Half, or 49%, of Canadian workers surveyed who have used AI at work say it has had "no impact" on their productivity, while more than the two-in-five, or 38%, reported a boost, noted Angus Reid in the survey presented on Monday.The proportion of Canadians in the workplace who report higher quality work when incorporating AI (29%) is outnumbered two-to-one by those who say, instead AI has had "no real impact" on the value of their output.Evidently, the parameters of AI use in the workplace are also in flux, finds Angus Reid. Three-in-ten (31%) who have used AI in the workplace say their employer has an official AI policy. More say either one is under development (30%) or non-existent (39%).The majority (54%) expectation from Canadian workers is that further AI adoption will offer a mixed bag with both downsides and upsides in their own workplace, added Angus Reid. However, there are more "pessimistic" that the effect will be profoundly negative (17%) than "optimistic" that it will be more positive than not (11%).

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Treasury61d ago

Macquarie Economist Sees Bank of Canada on Hold Wednesday, But Predicts 25bps Rate Hike in September

The Bank of Canada rate decision is scheduled for Wednesday at 9:45 a.m. ET, said David Doyle, head of economics at Macquarie Group.Doyle's base case is for a hold with the Overnight rate likely to remain at 2.25%.Since April's decision, market pricing has moderated significantly as domestic economic data have generally surprised on the downside, stated the economist. Forward guidance is likely to continue to suggest a hiking bias, reflecting greater concern about inflation.The BoC is likely to downplay the importance of the recent Q1 real gross domestic product contraction and the discussion of a technical recession in the media, especially given a strong preliminary estimate for April, according to Doyle.Messaging on this is likely to be emboldened by the strength apparent in the Labour Force Survey (LFS) for May.Macquarie continues to see the next policy move as a rate hike, but suspects this will only come later this year in the context of labor market improvement and still elevated inflation.Doyle's base case is for two hikes of 25 bps each, with the first one occurring in September 2026.

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Treasury61d ago

Commerzbank on Overnight News

Commerzbank in its "European Sunrise" note of Tuesday highlighted:Markets: United States Treasuries bear-steepen into New York close, stabilize in Asia. U.S. equities also close lower, e-minis recover. Brent falls below US$94/barrel. The US dollar (USD) is softer.U.S.: Job-loss fears are rising alongside the probability of quitting jobs, NY Fed survey finds. Inflation expectations are little changed.Iran war: President Donald Trump says Iran is willing to agree not to have a nuclear weapon, the U.S. will declare "total victory" over the next two weeks, he could have an idea on Iran in one to two days, is "very close" to a strong deal. Earlier Iran and Israel agreed to halt attacks after Trump issued a warning to Prime Minister Benjamin Netanyahu (Axios).G7: French President Emmanuel Macron to host video call between G7 and China to address global trade imbalances (Politico).AI: OpenAI files confidentially for IPO, listing seen as soon as this fall. SpaceX is "well oversubscribed" with institutional investors placing orders for about US$10 billion (Bloomberg).Fitch changes global sovereign sector outlook to "deteriorating" from "neutral."==EUROPE:Italy: The government won't interfere in the battle for Monte dei Paschi, the issue will come down to "whoever pays more" (Finance Minister Giancarlo Giorgetti).Germany/France: Governments cancel 100 billion euros joint fighter-jet project.U.K.: British BRC retail sales growth beat expectations at 3.4% in May, while consensus was 0.8%.==ASIA:China: Exports rose more than expected in May, pushing trade surplus to US$105 billion, while the consensus was US$93 billion.

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Treasury61d ago

There's "No Boom, No Bust" in Canada's Jobs, Says BMO

Forgive Canadian economy-watchers, as they are collectively suffering from an acute case of indicator whiplash in the past 10 days, said Bank of Montreal (BMO).First, they fielded a wave of enquiries on whether Canada was suddenly engulfed in recession, following the surprise Q1 dip in gross domestic product, noted the bank. Then, just a week later, the May jobs data printed one of the largest non-COVID gains in full-time employment on record.Clearly, the reality is somewhere in between these two extremes, stated BMO.Perhaps the best way to capture the 'true' underlying story is to look at the year-over-year change in total hours worked, according to the bank. Even with a bounce last month, theyare still up only 0.3% year over year. Meanwhile, for monthly GDP, it's now up 0.8% y/y, based on April's flash result.Those yearly results look through the sometimes wild swings in monthly data and both make a lot of sense -- consistent with an economy that is just barely grinding forward, pointed out BMO.The yearly trend in jobs and hours -- barely above zero -- is soft, and as such, there's definitely no boom, but it is simply not in the league of weakness of prior recessions, added the bank.

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Treasury61d ago

SocGen's Overnight Economic News Summary

Societe Generale in its early Tuesday economic news summary pointed out:Brent off 1% to US$93.3/barrel. President Trump: peace deal "within two or three days," agreement would allow the Strait of Hormuz to reopen immediately and ban Iran from having nuclear weapons. Iran: will resume attacks if Israeli strikes in southern Lebanon continue. 10-year United States Treasury -1.5bps at 4.545%, support 4.53%. Germany's Bund dips to 3.05%, support 3.03%.Japan: The central bank (BoJ) is set to raise rates to 1% next week, with scope for additional tightening beyond that, discuss pausing or ending quarterly reduction in bond buying (Nikkei). 10-year Japanese government bond -5bps to 2.655%.China trade surplus widens to US$105.4 billion in May from US$84.82 billion in April. Exports up19.4% year over year led by Artificial Intelligence equipment.Day ahead: U.S. trade balance, ADP weekly employment. European Central Bank speaker Moulin speaks at the Europlace finance forum in Paris, Germany sells 2033, 2035, 2053 bonds. Mexico's consumer price index.Nikkei +2.1%, EUR 10-year IRS -1bp 3.10%, Gold -0.1% at US$4,338/oz.

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Treasury61d ago

US 10-Year Treasury Yield Leans Higher at 4.55%, 2-Year Rate Declines 2.2 Basis Points to 4.15% Early Tuesday

Treasury61d ago

US Treasury Yields Mixed Pre-Bell Ahead of ADP Jobs, Existing Homes Sales, Int'l Trade Data as Trump Claims Iran Deal on Track

Treasury61d ago

Ciena Prices Upsized Senior Notes Offering

Ciena (CIEN) said Monday it has priced its private offering of $2.5 billion in 0% convertible senior notes due 2031.The initial conversion rate for the notes is 1.3393 shares per $1,000 principal amount of the notes, or an initial conversion price of about $746.66 per share.Initial purchasers have been granted a 13-day option to purchase up to an additional $375 million of the notes.The offering, upsized from the initial $2 billion offering, is set to close Thursday.Proceeds from the offering will be used to pay down debt, repurchase shares, and on capital outlays, to enhance production of the company's optical networking infrastructure, to meet demand from AI-buildouts. The bond offering, due to close Thursday, could be expanded by an additional $375 million.Shares of Ciena rose more than 1% in recent premarket activity Monday.Price: $471.69, Change: $+5.02, Percent Change: +1.08%

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Treasury62d ago

Fairfax Completes US$750-Milliion Senior Notes Offering

Fairfax Financial Holdings Limited (FFH.TO) after the close Monday said it completed its private offering of US$750 million in principal amount of 6.200% senior notes due 2056.The company said it intends to use proceeds of this offering for general corporate purposes.According to the statement, the offering was made solely by means of a private placement either to qualified institutional buyers pursuant to Rule 144A under the U.S. Securities Act of 1933, as amended, or to certain non-U.S. persons in offshore transactions pursuant to Regulation S under the Securities Act.The company shares closed up C$32.06 to C$2,252.77 on Toronto Stock Exchange.

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Treasury62d ago

TSX Closure: The Index Gains As Energy, Financial Shares, Advance Ahead of the BoC's Rate Decision

The Toronto Stock Exchange closed higher on Monday, recovering some of Friday's 804-point drop as strength in energy, financial and base metals stocks offset weakness in battery metals and defensive sectors, while investors weighed rising oil prices, inflation concerns and expectations the Bank of Canada will leave interest rates unchanged this week.The S&P/TSX Composite Index closed up 65.29 points, or 0.19%, to 34,478.74, with sectors mixed. Battery Metals Index led decliners , down 12.33%, while Health Care, Telecom, Utilities and Industrials were down 2.27%, 0.42%, 0.83%, and 0.15%, respectively. Energy led gainers, up 1.63%, with Financial, up 0.42%, Information and Technology, up 0.88%, and the Base Metals, up 1.13%.In commodities, gold fell to a fresh five-month low as rising oil prices fueled concerns that higher energy costs could keep inflation elevated and pressure central banks to raise interest rates. Gold for June delivery was last down US$5.00 at US$4,360.30 an ounce, while Saxo Bank said renewed tensions in the Middle East and a stronger-than-expected U.S. jobs report had reinforced expectations that the Federal Reserve may need to raise interest rates in 2026.However, oil prices rose as renewed hostilities between Iran and Israel heightened concerns over global crude supplies, although gains eased after reports the two sides had agreed to halt further attacks. WTI crude settled up US$0.76 at US$91.30 a barrel after earlier climbing as high as US$95.47, while Brent crude rose US$1.13 to US$94.22. Market participants continued to monitor the impact of tensions around the Strait of Hormuz, a key transit route for global oil shipments, with reports noted that supply risks are overshadowing OPEC+'s planned production increases.Against that backdrop, National Bank said the BoC should consider publishing an unemployment-rate forecast as part of its quarterly Monetary Policy Report, mentioning that labor market conditions are central to the inflation outlook and the future path of interest rates.The bank noted that the monthly Labour Force Survey remains the most closely watched Canadian economic release for bond markets, as employment and unemployment data help investors gauge inflation pressures and recalibrate expectations for monetary policy. It added that publishing unemployment-rate projections, alongside an estimate of the economy's trend or natural unemployment rate, would improve market understanding of how the central bank is likely to pursue its price-stability mandate.Meanwhile, CIBC said Canada's efforts to reduce its reliance on the U.S. economy through trade diversification have yielded only modest results despite recent progress. The bank noted that Canada has 15 free-trade agreements covering 51 countries and more than 61% of global GDP, but the impact on export diversification has been limited.CIBC said the share of Canadian exports destined for the United States has fallen to 69% over the past 12 months from 76% in 2024, with demand from China and Europe helping offset some of the decline. The lender added that despite ongoing trade tensions, Canada's long-term economic alignment is likely to remain with the United States.Looking ahead, National Bank said the BoC is expected to leave its overnight target unchanged at 2.25% on Wednesday. This would mark the fifth consecutive hold after policymakers first declared in October that policy is at "about the right level" to keep inflation near target and support the economy's transition, noted the bank.There is little in the data to justify a more hawkish shift from the BoC at its Wednesday policy meeting, said ING. April inflation undershot expectations with the headline consumer price index rising more modestly than feared to 2.8% year over year from 2.4%, the market consensus had been 3.1%, while core inflation surprisingly slowed. Meanwhile, the labor market has been mixed, noted the bank.Despite the gain in employment data on Friday, UBS said the BoC considers this in the broader trend of a "soggy" labor market. A flat four-month moving average in employment growth, even with Friday's strong gain in May, suggests the BoC would need to see a sustained improvement rather than just this one-month gain before this would tip the balance, stated UBS. This also has to be framed alongside disappointing growth in Q1, writes the bank in a note to clients.Additionally, the federal government on Monday offered loans to airlines struggling to cope with the soaring price of jet fuel, as Iran war forced them to cut flight schedules and curtail profit forecasts, reported The Canadian Press.The new program will let carriers borrow up to $150 million each, said Finance Minister Francois-Philippe Champagne."By building on existing relief measures with targeted and temporary support for Canada's airline sector, we are helping maintain connectivity, protect Canadian jobs and reduce pressures on travelers during this period of elevated fuel costs," Champagne said in a news release.Besides, s new report pointed out Canada could be poised for a slower-than-usual summer rental market as average asking rents for May were down approximately $100 from a year earlier, reported CP.The latest monthly analysis from Rentals.ca and Urbanation finds the average asking rent for May was down 4.7 per cent year-over-year to $2,029, marking the 20th consecutive annual decline, it added.

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Treasury62d ago

TSX Closure: The Index Gains As Energy, Financial Shares, Advance Ahead of the BoC's Rate Decision

S&P/TSX CompositeS&P/TSX Composite$CXY