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CANADA: TD Securities Don’t Share Market’s Conviction On 50bp Cut

CANADA
Bank of CanadaGlobalCentral Bank NewsCanadaBulletMarketsFixed Income BulletsForeign Exchange BulletsRegionNorth America
  • TDS: “The downside surprise on headline CPI throws another wild card into the October BoC decision, but we do not share the market's conviction on 50bp cuts even with headline tracking below projections from the July MPR. Core inflation measures have largely performed in line with the BoC's projections, and the stable performance for CPI-trim/median along with some stabilization in core goods should make it easier to look through September.”
  • GDP tracking under the BoC forecast still leaves a powerful argument for sustained cutting though and they "expect USDCAD to keep grinding higher to 1.39 which can offer a tactical cap. Further catalysts for USD strength now lie in global data outside the US weakening and in US elections.”
  • BMO, CIBC and National have all switched to calling for a 50bp cut next week since today’s CPI report, joining Desjardins and RBC in the process. 
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  • TDS: “The downside surprise on headline CPI throws another wild card into the October BoC decision, but we do not share the market's conviction on 50bp cuts even with headline tracking below projections from the July MPR. Core inflation measures have largely performed in line with the BoC's projections, and the stable performance for CPI-trim/median along with some stabilization in core goods should make it easier to look through September.”
  • GDP tracking under the BoC forecast still leaves a powerful argument for sustained cutting though and they "expect USDCAD to keep grinding higher to 1.39 which can offer a tactical cap. Further catalysts for USD strength now lie in global data outside the US weakening and in US elections.”
  • BMO, CIBC and National have all switched to calling for a 50bp cut next week since today’s CPI report, joining Desjardins and RBC in the process.