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TD Securities Expect Dovish Read on Canada Employment Data

CANADA
  • TD Securities look for the April hiring surge to give way to softer labour market conditions in May with 15k jobs added as the unemployment rate climbs 0.2pp to 6.3%, both relatively negative assumptions considering the median Bloomberg surveys.
  • TD note that Canadian employment data has a history of mean-reversion after large gains, which raises the bar for another above-trend performance in May. Softer wage growth should add to the more dovish tone, with AHE for permanent workers forecast to slow 0.1pp to 4.7% y/y.
  • TD believe this is a fairly straight forward read for the jobs print, as a really strong print could see July pricing dial back a bit, whereas a really weak number could see the market start pricing in 80% probability for a cut in July.
  • As is generally the case, it is all about the aggregation of all the data going into the next BoC meeting. For now, TD sit with a notably dovish bias in Canada (long the front-end with steepeners outright and vs the US). Our only non-dovish Canada trade right now is a short Canada vs the US in 10s trade where TD see value in favour of that trade over the longer term.
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Homepagemarkets-real-timeBulletMarketsFixed Income BulletsForeign Exchange BulletsCanada Bank of Canada Market News

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