Canada

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July 01, 2025

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Trump Tariffs: Poker Face?
Paying Article

July 1, 2025 12:55 PM UTC

Our central scenario (but less than 50%) is towards a scenario of compromise, with some agreements in principle or trade framework deals, delays for most other negotiating in good faith but with one or two countries seeing a reciprocal tariff rise e.g. Spain and/or Vietnam.  This could still be fol

June 25, 2025

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June Outlook: Trump’s Fluid Policies
Paying Article

June 25, 2025 10:00 AM UTC

All chapters of the June Outlook are now available and simply click the link below. 

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Outlook Overview: Trump’s Fluid Policies
Paying Article

June 25, 2025 7:20 AM UTC

·       President Donald Trump still wants to use the tariff tool, and we see the eventual average tariff rate being in the 13-15% area, lowered by deals but increased by more product tariffs. Any lasting legal block on reciprocal tariffs will likely see the administration pivoting towards ot

June 24, 2025

Canada May CPI - Mixed data leaves July BoC decision a close call
Paying Article

June 24, 2025 12:49 PM UTC

May Canadian CPI has come in as expected, unchanged at 1.7% with this yr/yr rate still restrained by the abolition of the consumer carbon tax which took 0.7% off the rate in April. The BoC’s core rates are on balance slightly softer, but do not fully reverse acceleration seen in May, leaving the J

June 18, 2025

Canada: BoC's Macklem - Leaves options open on rates
Paying Article

June 18, 2025 3:34 PM UTC

Comments from BoC's Macklem, reiterating yesterday's minutes, see situations in which the BoC would ease again but also those in which it could stay on hold.

June 12, 2025

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Trump Tariffs: China and July 9 Reciprocal Deadline
Paying Article

June 12, 2025 7:17 AM UTC

 We attach a 65% probability to a U.S./China reaching a new trade deal that reduces the minimum overall tariff to 15-20% imposed by the U.S., most likely agreed in Q4 2025 and to be implemented in 2026.  However, a 35% probability exist of no deal and this could eventually mean higher tariffs (Fig

June 04, 2025

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Bank of Canada - Consensus to hold in June, but we now expect easings in July and October
Freemium Article

June 4, 2025 3:54 PM UTC

Governor Tiff Macklem stated that the Bank of Canada’s decision to leave rates unchanged at 2.75% was a clear consensus. There was more diversity of views on the path forward, though members thought there could be a need for easing, depending on data. We now expect two further easings in 2025, in

Canada: BoC's Macklem - Consensus to hold at this meeting but scope for future easing seen
Paying Article

June 4, 2025 2:04 PM UTC

The opening statement from BoC's Macklem suggests the decision to hold at this meeting was not the close call seen by many, but scope for future easing is seen, depending on how data evolves.

June 03, 2025

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Nato Summit 5% Target and Trump
Paying Article

June 3, 2025 10:48 AM UTC

Trump’s natural instincts will likely see extra pressure applied on Europe in the coming weeks to commit to 5%, but we do not see existential threats from Trump.  In the end, our baseline is that NATO will agree a “soft” aim of 5% (3.5% hard military spending and 1.5% infrastructure/cybersecu

June 02, 2025

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Trump’s 50% Steel And Aluminum: Negotiating Leverage?
Paying Article

June 2, 2025 7:42 AM UTC

•    President Donald Trump increase in steel and aluminum tariffs from 25% to 50% is not just about boosting the steel and aluminum industry.  It also a demonstration that Trump remains in control of tariffs and can aggressively change tariffs to increase negotiating leverage.  It is a mess

May 30, 2025

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Bank of Canada Preview for June 4: A close call for another policy pause
Paying Article

May 30, 2025 3:43 PM UTC

The Bank of Canada meets on June 4 and it is a close call between leaving rates unchanged at 2.75% and a 25bps easing to 2.5%, though we now lean to the former. The statement is unlikely to give any forward guidance and we still expect further easing this year as the economy weakens in response to U

May 29, 2025

Preview: Due May 30 - Canada Q1/March GDP - A slower quarter, with risk for a weak start to Q2
Paying Article

May 29, 2025 2:44 PM UTC

We expect Q1 Canadian GDP to rise by a five-quarter low of 1.5% annualized, below a 1.8% estimate made with the Bank of Canada’s April Monetary Policy Report. We expect a 0.1% increase in March GDP, matching an estimate made with February’s data. We expect a slight decline in the preliminary est

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Court Stops Trump Reciprocal and Fentanyl Tariff
Freemium Article

May 29, 2025 7:18 AM UTC

•    The Trump administration will likely follow a multi-track response by appealing the judgement but also fast-tracking section 232 product tariffs for pharmaceuticals and semiconductors.  The administration could also consider section 301 or 122 tariffs (the latter 15% for 150 days against c

May 20, 2025

Canada April CPI - Core rates highest for over a year
Paying Article

May 20, 2025 12:56 PM UTC

April Canadian CPI in falling to 1.7% yr/yr from 2.3% is slightly stronger than expected with the fall fully due to the ending of a carbon tax. The BoC’s core rates are stronger than expected, CPI-Median at 3.2% from 2.9%, CPI-Trim at 3.1% from 2.8% and CPI-Common at 2.5% from 2.3%.

May 19, 2025

Preview: Due May 30 - Canada Q1/March GDP - A slower quarter, with risk for further slowing in Q2
Paying Article

May 19, 2025 2:47 PM UTC

We expect Q1 Canadian GDP to rise by a five-quarter low of 1.5% annualized, below a 1.8% estimate made with the Bank of Canada’s April Monetary Policy Report. We expect a 0.1% increase in March GDP, matching an estimate made with February’s data. We expect a slight decline in the preliminary est

May 08, 2025

Canada: BoC's Macklem - Getting closer to lower-tariff scenario from April MPR
Paying Article

May 8, 2025 6:11 PM UTC

The BoC is getting less pessimistic about the tariff scenario, though we are not yet in the better of two scenarios outlined in April's MPR, just closer. Earlier today the BoC's Financial Stability Report saw resilience in the financial system with reduced consumer debt relative for income, while no

May 06, 2025

US March trade deficit surges as service export weakness adds to pre-tariff strength in goods imports
Paying Article

May 6, 2025 1:04 PM UTC

March’s record US trade deficit of $140.5bn is even higher than expected though consistent with the assumptions of the Q1 GDP report. Exports surged by 4.4% ahead of the April 2 tariff announcement while exports rose by a marginal 0.2%.

April 28, 2025

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US Exit: Lessons From Brexit?
Paying Article

April 28, 2025 8:05 AM UTC

Overall, the U.S. attempt to reshape global trade is unlikely to significantly improve its trade position, but the size and influence of the U.S. may mean it does not get hit in net exports volumes like the UK.  Even so, U.S. business investment could be restrained by ongoing uncertainty from the T

April 25, 2025

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Canada Election: Liberal Victory Likely, Stable Policy Expected
Paying Article

April 25, 2025 4:21 PM UTC

Canada’s election takes place on Monday. A victory for the ruling Liberals looks likely, but polls are close enough to mean that a hung parliament or even a majority for the opposition Conservatives, while unlikely, is not to be ruled out. Should the Conservatives spring a surprise, a more concili

April 23, 2025

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Trump Under Pressure
Paying Article

April 23, 2025 7:15 AM UTC

A deteriorating economic; volatile financial markets and weakening approval ratings are all putting pressure on the Trump administration to do trade deals.  However, Trump instincts means he still likes tariffs, while negotiations will not be quick with China restraints and non-tariffs list desired

April 22, 2025

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Foreign Official U.S. Treasury Holders: The Kindness of Strangers
Paying Article

April 22, 2025 7:30 AM UTC

Official holdings of U.S. Treasuries show a mixed picture with China, Brazil and Saudi Arabia well off peak holdings. Two drivers of some of these country flows are the peak in global central bank FX reserve holdings in 2021 and an increased holdings of other currencies in the last decade.  Neverth

April 17, 2025

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Safe Havens Other Than the USD
Paying Article

April 17, 2025 8:30 AM UTC

The USD and U.S. Treasuries are currently not acting like safe havens, as the crisis is U.S. centric with the tariff debacle. 10yr Treasuries can regain safe haven status if a U.S. recession occurs, but U.S. equities are still clearly overvalued versus equity and equity-bond metrics.  We prefer Ind

April 16, 2025

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Bank of Canada - Proceeding carefully, but risks still lean towards further easing
Freemium Article

April 16, 2025 4:28 PM UTC

The Bank of Canada left rates unchanged at 2.75% as expected. The statement concluded that the BoC will proceed carefully, noting that monetary policy cannot resolve trade uncertainty or offset the impacts of a trade war, but it can and must maintain price stability in Canada. While this shows cauti

Canada: BoC's Macklem - Less forward looking but prepared to act decisively
Paying Article

April 16, 2025 2:09 PM UTC

The BoC left rates unchanged as expected. They will proceed carefully but are prepared to act decisively, meaning their options are kept open.

April 15, 2025

Canada March CPI - Correction lower led by travel costs
Paying Article

April 15, 2025 12:54 PM UTC

March Canadian CPI in falling to 2.3% yr/yr from 2.6% is significantly weaker than expected. Lower prices for gasoline and travel tours were cited as negative influences, the latter surely impacted by the unwillingness of Canadians to travel to the USA.  The BoC core rates are on balance slightly s

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Nervous U.S. Long Term Asset Holders
Paying Article

April 15, 2025 8:30 AM UTC

   Overall, foreign equity investors can no longer count on U.S. exceptionalism and could face lower long-term corporate earnings growth, which at a minimum will likely slow net inflows.  Bond investors also face ongoing policy volatility, which likely means a need for an extra risk premium – t

April 10, 2025

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Trade Deals with the U.S.: Pressures and Obstacles
Paying Article

April 10, 2025 7:17 AM UTC

Pressures to do trade deals include the weaker U.S. economy and higher inflation when it arrives/foreigners becoming nervous of their USD30trn plus holdings of U.S. securities and more crucially risks to Trump and GOP approval ratings from Republican voters. Obstacles to quick trade deals include Tr

April 09, 2025

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U.S China Trade War: Deal or No Deal Prospects?
Paying Article

April 9, 2025 9:00 AM UTC

The prospect of a trade deal between the U.S. and China are less and likely delayed into 2026, due to the hardline stance of Trump 2.0 due to the extra focus on tariff tax revenue and shifting production back to the U.S. It is still our baseline that a deal will be agreed though we would now see a d

April 08, 2025

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Bank of Canada Preview for April 16: Easing to pause, but unlikely to be done
Paying Article

April 8, 2025 2:04 PM UTC

The Bank of Canada meets on April 16 and we expect that strength in some recent data and high uncertainty will see rates left unchanged at 2.75%. There will be little forward guidance and the accompanying Monetary Policy Report may avoid providing its usual economic forecasts. We do not expect that

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Reciprocal Tariffs: The Hit To Other Countries
Paying Article

April 8, 2025 9:30 AM UTC

 Overall, we are still assessing the effects on non U.S. countries from the tariffs being imposed by the U.S. via direct trade/business investment/currency and financial & monetary conditions swings.  The impact will be adverse to GDP, but for some major countries could be less than the U.S.  How

April 07, 2025

Canada - BoC Q1 Business Outlook Survey shows caution, Consumer Survey more pessimistic
Paying Article

April 7, 2025 2:57 PM UTC

The Bank of Canada’s Q1 business outlook survey is weaker, though probably not by enough to shock the Bank of Canada. The survey was conducted in February, when tariffs were a worry but not yet a reality. 

April 03, 2025

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Tariffs: Inflation may be the biggest worry for the U.S.
Paying Article

April 3, 2025 4:12 PM UTC

While surprising the market in their intensity, Trump’s “reciprocal” tariffs were in line with previous threats on most countries, and with Canada and Mexico being treated less harshly that feared, the net surprise is modest to us. However we do feel that inflationary risks have increased furt

March 31, 2025

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U.S. Trade Surplus Countries: No Special Treatment?
Paying Article

March 31, 2025 9:04 AM UTC

Quick dilutions of tariffs or exemption will likely be slow in coming for countries that the U.S. has trade surpluses with, as the Trump administration are currently more focused on tariffs for tax revenue and trying to switch production back to the U.S. than trade deals.  Trade policy uncertainty

March 27, 2025

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March Outlook: Navigating the Turbulence
Paying Article

March 27, 2025 10:30 AM UTC

All chapters of the March Outlook are now available and simply click the link below. 

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Car Tariffs Then Lenient Reciprocal Tariffs?
Freemium Article

March 27, 2025 8:59 AM UTC

   The 25% tariffs on cars underlines that tariffs are not just about getting better trade deals, but in Trump’s view raising (tax) revenue and trying to shift production back to the U.S. Combined with other tariffs being implemented, plus policy uncertainty, we see a moderate overall hit from t

March 26, 2025

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Bank of Canada Minutes from March 12 - Debate over the 25bps easing, agreement to proceed carefully
Paying Article

March 26, 2025 6:19 PM UTC

The Bank of Canada has released minutes from its March 12 meeting, and these show some debate about the meeting’s decision to ease by 25bps to 2.75% and agreement to proceed carefully with further changes to policy. A lot can happen before the BoC next meets on April 16, but these minutes suggest

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Outlook Overview: Navigating the Turbulence
Paying Article

March 26, 2025 9:30 AM UTC

·       More tariffs will arrive from the U.S. from April with product (car, pharma, semiconductors and lumber) and reciprocal tariffs. President Trump has a 3-part approach to tariffs to raise (tax) revenue; bring production back to the U.S. and get fairer trade deals.  This means some of t

March 21, 2025

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Trump Product and Reciprocal Tariffs
Paying Article

March 21, 2025 9:00 AM UTC

It appears that we will get bad news from April 2 on extra tariffs before any good news.  Firstly, the announcement effect of tariffs for many countries and extra products will hurt U.S. business and consumer sentiment.  Secondly, part of the reason for tariffs is extra tax revenue and to try to s

March 20, 2025

Canada: BoC's Macklem - Policy to be less forward looking
Paying Article

March 20, 2025 5:12 PM UTC

BoC Governor Macklem sees the Canadian economy as facing new uncertainty just after a soft landing had been achieved.

March 18, 2025

Canada February CPI - Acceleration clearer as sales tax holiday ends
Paying Article

March 18, 2025 12:51 PM UTC

February Canadian CPI at 2.6% yr/yr from 1.9% in January is significantly stronger than expected, with the rise inflated by the mid-February expiry of a sales tax holiday that started in mid-December. This will lift March data further. The Bank of Canada’s core rates are also stronger, suggesting

March 12, 2025

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Bank of Canada - With risks on both sides, timing matters
Freemium Article

March 12, 2025 3:47 PM UTC

The Bank of Canada eased as expected by 25bps to 2.75%, a level it sees as neutral. Given massive uncertainty clear forward guidance is impossible but they made no attempt to hide the gravity of the problem, Governor Tiff Macklem stating Canada is facing a new crisis from which the economic impact c

Canada: BoC's Macklem - Facing new crisis, impact could be severe
Paying Article

March 12, 2025 2:06 PM UTC

BoC Governor Macklem will weigh the impact of a weaker economy and higher prices, though today's easing shows the immediate focus is on the economy.

March 10, 2025

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Trump and Dollar Policies
Paying Article

March 10, 2025 6:04 AM UTC

   The Trump administration could decide to more broadly talk the USD down or less likely try to reach a cooperative Mar A Lago accord with big DM and EM countries. A more cohesive alternative is a forced currency deal for countries to appreciate their currencies to avoid more tariffs and withdraw

March 06, 2025

U.S.-Canada trade, Lutnick and Trump
Paying Article

March 6, 2025 4:12 PM UTC

Commerce Secretary Lutnick states Trump is likely to defer tariffs on all USMCA goods which he believes is more than half of the total with Canada and Mexico. Canada however says retaliation will stay until all US tariffs are removed. We are looking at reducing rather than removing the damage.

March 05, 2025

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Bank of Canada Preview for March 12: Tariff risks justify a further 25bps easing
Paying Article

March 5, 2025 5:51 PM UTC

The Bank of Canada meets on March 12, and while the tariff picture is still anything but clear, we expect a 25bps easing to 2.75%. The economic damage done by the ongoing tension is already likely to be significant, and may become seriously so. Inflationary risks have increased, and the Canadian eco

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Trump Latest Thinking
Paying Article

March 5, 2025 11:07 AM UTC

Bottom line: President Donald Trump signaled that he is committed to tariffs to raise revenue; bring production back to the U.S. and get fairer trade relations.  This three part approach will likely shape implementation of further product and reciprocal tariffs from April.  However, reports sugges

March 04, 2025

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Trump Tariffs: Bad for The U.S. Worse For Canada
Paying Article

March 4, 2025 3:48 PM UTC

When Trump announced 25% tariffs on Canada and Mexico in February, we put up a piece outlining the likely economic consequences, which became dated by the end of the day as Mexico and Canada won a one month delay in return for some concessions at the border. We are now recycling that story, with som

March 03, 2025

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Trump Tariffs and U.S. Business and Consumer Sentiment
Paying Article

March 3, 2025 9:02 AM UTC

 •    Mexico and Canada are trying to frantically find solutions to delay across the board tariffs again, though the U.S. is hinting that the rate could be less than 25%.  China extra 10% tariff remains likely, as the U.S. increases trade pressure on China.  More tariffs also remain highly

February 27, 2025

Preview: Due February 28 - Canada Q4/December GDP - A solid quarter outside weaker inventories
Paying Article

February 27, 2025 4:10 PM UTC

We expect Q4 Canadian GDP to rise by 1.7% annualized, marginally below a 1.8% estimate made with the Bank of Canada’s January Monetary Policy Report but with positive details outside inventories. We expect a 0.1% increase in December GDP, slightly below a 0.2% estimate made with November’s data.

February 21, 2025

Canada: BoC's Macklem - Outlines grim scenario for Canada if tariffs are imposed
Paying Article

February 21, 2025 7:43 PM UTC

BoC Governor Macklem sees limited scope for the BoC to undo the economic damage from tariffs, but would seek to keep price gains as one-time.