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TD Bank Group Issuing CHF 150 Million Green Bond

$TD.TO

US Treasury Closing Levels

3:00 Thursday vs 3:00 Wednesday2yr 99-23 vs 99-21; 3.881% vs 3.926%5yr 99-11 vs 99-09; 4.019% vs 4.056%10yr 97-29 vs 97-24; 4.388% vs 4.409%30yr 96-11 vs 96-13; 4.985% vs 4.979%2/10 50.435 bps vs 48.031 bps5/30 96.315 bps vs 92.231 bps

UBS Sees Bank of Canada in An "Extended Pause" on Rates

The Bank of Canada held interest rates steady at 2.25% on Wednesday, as was widely expected, said UBS.As the bank also forecast, the guidance delivered by the BoC was largely unchanged from the March policy meeting: uncertainty is elevated, the impact of shocks on the outlook unknown and Canada's central bank is ready to respond as needed.Inflation breadth and inflation expectations will be key to watch for potential shifts in the stance of policy, states UBS. With this, the bank thinks the BoC remains on an extended pause and it sees no change in rates from them this year.Wednesday's updated monetary policy report took on board a higher path for oil prices, the bank noted. This did not boost the expectation for headline consumer price index as much as UBS expected, but it did push up to 2.3% in 2026 versus 2.0% previously.The expectations for growth were little changed. The BoC also left its estimates for the neutral rate unchanged at the 2.25%-3.25% range, with slower population growth offsetting higher potential growth and the spillovers from an expectation that the United States neutral rate is higher.

Canada's Q1 Economy Holding on in Q1 Despite Headwinds, National Bank Says

Canada's economy grew by 0.2% month over month in February, a result in line with Statistics Canada's preliminary estimate released a month earlier, said National Bank of Canada.This strong performance was driven by a robust rebound in the manufacturing sector, which posted a 1.8% month-over-month increase following a 1.3% decline in January.It would be a mistake to rejoice in the sector's strength, as this surge is primarily attributable to a return to normal operations at auto assembly plants following a January marked by production stoppages due to changes in production models, retooling and maintenance, noted the bank.Despite February's rebound, activity in the sector remains 3.1% below its level a year ago. The sector continues to be plagued by U.S. tariffs and uncertainty surrounding the renewal of the CUSMA trade deal, the bank stated. The bank recalled that the 50% tariffs on steel, aluminum, and copper, which previously applied only to component costs, were replaced by a 25% tariff applied to the total product price at the beginning of April, as such significantly impacting the competitiveness of certain products.Excluding the manufacturing sector, the Canadian economy stagnated in February.Overall, the data released on Thursday confirms that the Canadian economy has held up in Q1 despite current headwinds, added the bank. Despite the expected stagnation of the economy in March, GDP by industry shows growth of 1.7% on an annualized basis in Q1.Not less than 12 out of 19 sectors posted growth during the quarter. Under normal circumstances, such growth would be considered decent, but it comes at a time when the population is shrinking, which is holding back the economy's potential GDP, according to National Bank.Consequently, GDP per capita is on track to experience its strongest growth in 15 quarters, or 2.1% annualized. This is good news for an economy with excess supply and an unemployment rate above its full-employment level. Unfortunately, past performance is no guarantee of future results regarding this renewed growth.The Canadian economy remains vulnerable due to tariff uncertainty and the global geopolitical situation, now, said the bank. While higher commodity prices could benefit some industries, the potential upside should be offset by the negative impact on consumers, who are facing a jump in inflation.Weak real estate activity in major urban centers across the country (Toronto, Vancouver, among others) is causing a negative wealth effect, which represents another headwind for consumers.

Canada's Spring Budget Update Shows Government to Spend The Savings, UBS Says

The government of Canada on Tuesday released its spring economic update, with the revised projections for the fiscal deficit in 2025-26 down about $2 billion to around $67 billion, or roughly 2.1% of gross domestic product relative to the 2.5% prior, said UBS.That still implies a widening of the deficit of 0.9 percentage point of GDP relative to the 2024-25 fiscal year and the deficit is expected to remain wide at 1.9% of GDP in fiscal year 2026-27 and 1.8% in FY 2027-28, writes the bank in a note to clients.The better deficit outlook for FY2025-26 reflects a combination of stronger growth and revenues on the basis of higher oil prices, but also a reassessment of the rollout expected from several programs in the coming years, stated UBS.This includes revised allowances for liabilities for natural disasters, and revised timing for uptake of Clean Economy investment tax credits and electric vehicle battery manufacturing supports.With the slower expected spend out, the bank marks down its expectation for support from fiscal this year by a tenth, and adds a little into next year and 2028. This leaves the UBS expectations for real GDP growth at 1.5% for this year, 1.7% in 2027 and 1.8% in 2028.Fiscal actions since Budget 2025 and incorporating the Spring Economic Update are estimated to cost about $55 billion over the next six years, with around $38 billion of this coming from this week's update.The majority of the new spending is roughly $25 billion over the next three years on a cash basis, earmarked to launch a Canadian sovereign wealth fund -- the "Canada Strong Fund" -- and a smaller roughly $6 billion allocated to boost the skills of young workers and to support building out the supply of housing.

Bank of Canada Doesn't Intend to Chase The Oil Price Run-Up, Says Rosenberg Research

There was nothing at all hawkish about the Bank of Canada press statement on Wednesday, said Rosenberg Research.There was no surprise that the policy rate was held at 2.25% for the third meeting in a row, but the tone was very measured in what can only be described as a carefully worded statement, Rosenberg noted.What is important is that there was nothing to validate the market's view that three rate hikes are coming in Canada's way, stated Rosenberg. At most, a prolonged "wait and see" approach.While short-term inflation expectations have risen alongside the energy price shock, the BoC noted that "longer-term inflation expectations have remained anchored." The latter is far more important when it comes to decision-making from any central bank, Rosenberg pointed out.The statement made it clear that the BoC is ready and willing to "look through the war's immediate impact on inflation" even as it added that it stands ready to respond if there are signs of any sustainable pass-through.The BoC added that to date, "there is little evidence that oil prices have fed through more broadly." The expectation is that inflation will peak at 3.0% year over year in April and head to the 2.0% target by early 2027.Benchmarked against market expectations, Rosenberg added that it "would actually label this dovish at the margin."

Canada's Economy Continues "Hanging in There", Likely Keeping Central Bank on Hold, Says BMO

The Canadian economy continued its decent start to the year with February gross domestic product climbing 0.2%, as expected, said Bank of Montreal (BMO) after Thursday's data.Strength came in manufacturing, transportation/warehousing and wholesale trade, or up 0.9% month over month. However, only eight of 20 sectors grew in the month, highlighting that the economy continues to struggle despite the decent headline, noted the bank.The March GDP flash showed activity was unchanged in the month, though the Q1 GDP flash growth came in at 1.7% annualized, a touch better than BMO and the Bank of Canada's 1.5% forecast."Unfortunately," the flat March provides a tougher handoff for Q2, so unless Canada gets a strong April, BMO expects some deceleration in GDP growth.The economy continues to "hang in there" despite the ongoing dark cloud of trade uncertainty, added the bank. Canada now has the added shock of higher energy prices to deal with.Statistics Canada noted that retail activity weighed on March, so there appears to be some early impact.All told, there's nothing here to move the needle for the BoC, with growth about as expected, according to BMO. Policymakers are watching energy prices and the potential pass-through to core inflation.

Canada Bond Yields Fall After GDP Data, Wednesday's Surge, Says CIBC

Canadian bond yields fell following Thursday's gross domestic product release to partly unwind the surge seen the day before in reaction to the perceived hawkish tone from the Bank of Canada, said CIBC.Growth in the Canadian economy appears to have reignited in Q1, although it is far from running on all cylinders, and March's advance estimate points to a stall again at the end of the quarter, noted the bank. The continued uneven paths for GDP growth and employment suggest that slack within the economy isn't being absorbed, and will continue to act as an offset to higher energy prices in keeping core measures of inflation grounded.Because of that, CIBC continues to believe that Canada's central bank can look through the current spike in headline inflation, and keep interest rates on hold throughout this year.Monthly GDP data for February pointed to a 0.2% month-over-month increase, which was in line with the consensus forecast. The advance estimate for March GDP pointed to a flat reading.While growth in Q1 appears close to the BoC's Monetary Policy Report projection, the apparent stall again in March is a concern regarding momentum heading into the spring, stated CIBC. Consumer spending appears to be slowing again, which is understandable given the squeeze from higher gasoline prices as well as a still sluggish labor market.The bank continues to believe that there's enough slack within the economy to keep core measures of inflation fairly muted, even as the impact of higher energy prices passes through in some areas, which will enable the BoC to leave interest rates on hold through 2026.

Canadian Economy Maintains Momentum in February as Temporary Drags Fade, Says RBC

With population growth slowing, per-capita improvement is expected to continue, RBC said Thursday, while noting that on a quarterly basis, Canadian business activity remains broadly consistent with its base case for moderate expansion, with Q1 GDP tracking slightly higher than RBC's own forecast of 1.3% annualized GDP growth, as well as the Bank of Canada's 1.5% projection in its April Monetary Policy Report.For the BoC, RBC's base case remains unchanged. RBC expects the BoC to hold rates steady for the remainder of 2026, although it noted the central bank signaled at its April meeting that it will be keeping a close eye on the evolution of underlying inflation (ex-energy) measures and broader economic growth implications from higher energy costs due to the ongoing conflict in the Middle East.Canada's gross domestic product growth increased 0.2% month over month in February, matching Statistics Canada's advance estimate and RBC's own expectations. Both goods-producing and services industries contributed to the gain as temporary disruptions in the auto sector in January started to unwind. Manufacturing and wholesale trade rebounded as auto production normalized following earlier model changeover shutdowns, while retail GDP advanced 0.2%, pointing to ongoing resilience in consumer spending. Weak spots in February were concentrated in construction, the public sector, and an added decline in entertainment, attributed to the two-week break in NHL games during the Olympics, noted RBC.Looking ahead, the advance estimate for March GDP was "essentially unchanged." Those early estimates are highly revision-prone, but early indicators for March suggest growth momentum has held steady into the end of Q1, said RBC.Hours worked edged higher by 0.2%, while advance manufacturing sales rose 3.5% in March -- in part reflecting higher oil prices, but also consistent with further recovery in auto production. Excluding oil and related products, advance wholesale sales also rose 1.3%, RBC noted.

Canada's Economy "Looks To Be Off To a Solid Start" In 2026, But "Faces Significant Cross Currents", says TD

Canada's economy "looks to be off to a solid start" in 2026 after GDP contracted in Q4 2025, TD's Marc Ercolao said Thursday. With February's print and a flash estimate for March, Q1 2026 growth is tracking around 1.7%, broadly consistent with the Bank of Canada's recently updated economic projections and its own forecast, he noted."How growth evolves beyond Q1 will matter more for the policy outlook than the near term momentum itself, as the Canadian economy faces significant cross currents -- most notably elevated trade uncertainty and, more recently, spillovers from the ongoing Middle East conflict," Ercolao said."The BoC has emphasized that these forces leave two sided risks to the outlook, and policy remains data dependent, with the Governing Council prepared to respond if growth or inflation deviates materially from expectations. That said, our base case remains that the Bank holds the policy rate steady for the remainder of the year," he added.Canadian gross domestic product ticked higher by 0.2% month over month in February, in line with Statistics Canada's advanced guidance and market expectations. Advanced guidance calls for no growth in March, with further gains in wholesale and transportation sectors being offset by a pullback in retail trade and the mining, oil and natural gas sector, Ercolao noted.

Canada's Q1 GDP Reignites in Q1, But Not Enough to Push Central Bank to Change Rates, Says CIBC

Growth in the Canadian economy appears to have "reignited" in Q1, although "it still isn't running on all cylinders", said CIBC after Thursday's gross domestic product data.Monthly GDP data for February pointed to a 0.2% month-over-month increase, which was in line with the consensus forecast and the advance estimate, noted the bank.Among highlights, CIBC noted the manufacturing sector was "easily" the largest contributor, aided by a rebound in the auto industry following a contraction in January. An easing of supply bottlenecks in the auto industry also drove growth in wholesaling. However, trends were "decidedly more mixed" outside of those sectors, and the advance estimate for March pointed to a flat reading for that month.For Q1 as a whole, Thursday's advance estimate suggests annualized growth of 1.7%, which is very close to the Bank of Canada's Monetary Policy Report projection of 1.5%, CIBC said. However, the slowing of momentum again in March, combined with the Survey of Employment, Payrolls and Hours (SEPH) data also on Thursday showing a decline in employment in February (-60,000), may be a concern for what's to come in Q2, it added.Overall, though, movements in oil markets as well as any signs of whether inflationary pressures are spreading to core metrics, will continue to be more important in determining whether the Bank of Canada feels the need to raise rates this year, according to CIBC.CIBC continues to believe that there's enough slack within the economy to keep core measures of inflation fairly muted, even as the impact of higher energy prices passes through in some areas, which will enable the BoC to leave rates on hold through 2026.

Economy Expanded 0.4% In Q1 When February Rise, Flat Advance Read For March Are Taken Into Account, says Statistics Canada

Canadian real gross domestic product (GDP) was up 0.2% month over month in February, with goods-producing industries driving the growth for the second consecutive month, said the country's statistical agency on Thursday.February's GDP growth was perfectly in line with a consensus figure provided by MUFG.Advance information indicates that real GDP was "essentially unchanged" in March, writes Statistics Canada in a statement. Increases in wholesale trade and transportation and warehousing were offset by decreases in retail trade and mining, quarrying, and oil and natural gas extraction.With this advance estimate for March, information on real GDP by industry suggests the economy expanded 0.4% in Q1 2026, stated StatsCan.Goods-producing industries grew 0.4% month over month in February, driven by expansions in manufacturing and mining, quarrying, and oil and gas extraction, added the Ottawa-based agency. Services-producing industries edged up 0.1%, as rebounds in transportation and warehousing and wholesale trade were largely offset by contractions in the public sector.For Canada, GDP and Income and Expenditure Accounts measure the production of goods and services in the Canadian economy as well as the incomes arising from this production and expenditure on the production. GDP represents the unduplicated value of goods and services produced during the reference period and are available for domestic consumption, investment or export.

Brief: Statistics Canada Says Preliminary Q1 GDP Expands 0.4%

Brief: Statistics Canada Says Preliminary GDP for March "Essentially Unchanged" M/M

Job Vacancies Held Steady in February, Statistics Canada adds Thursday

Canada Average Weekly Earnings Increased Both On a Month-over-month and Year-over-year Basis, Statistics Canada says Thursday

Brief: Canada's GDP Expands 0.2% M/M in February; MUFG Says Consensus Saw 0.2% M/M Rise

Scotiabank Previews Thursday's GDP Data in Canada

Canada will publish gross domestic product for February and preliminary March at 8:30 a.m. ET on Thursday, said Scotiabank.Canada's economy likely posted modest growth in February of 0.2% month-over-month seasonally, noted the bank.Key, however, may be March GDP for which there has been very little data and which serves as an important contribution to tracking Q1 overall and to hand-off math into Q2 GDP, stated Scotiabank.Q1 GDP is tracking 1.5 to as much as over 2% quarter over quarter seasonally adjusted annual rate, added the bank.

BMO on The Day Ahead in Canada

Canada will release gross domestic product for February and preliminary March at 8:30 a.m. ET on Thursday, said Bank of Montreal (BMO).Real GDP looks to expand for a third straight month in February, by 0.2% month over month amid stronger manufacturing shipments and retail sales, noted the bank.Statistics Canada will also report its advance estimate for March GDP, hence capturing the initial effects of the Iran war, as well as a tally for Q1, which BMO expects will show a decent rebound to around 1.5% annualized following Q4's modest contraction.Also at 8:30 a.m. ET Thursday, StatsCan releases payroll and job vacancy data (SEPH) for February, which could print lower given the sharp (84,000) drop in household survey employment that month, stated the bank.Money markets are once again pricing in a couple of rate increases from the Bank of Canada this year after it stated on Wednesday that rate hikes might be needed if rising oil prices add persistence to inflation or raise long-run inflation expectations, which so far remain anchored, added BMO.Still, the bank expects the BoC to remain on hold for the foreseeable future, as weak demand and slack in the labor market should limit any second-round effects of higher energy costs on inflation.