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How Markets Misread Canadian GDP
Markets didn’t spend any time looking beneath the GDP headlines while piling into the Canadian front-end and driving yields lower. They should have. I view the numbers as very constructive for several reasons not least of which that growth in consumer spending is at its strongest in years and needs no help from rate cuts. Before turning to details, the immediate market reaction was that Canadian two-year bonds rallied by about 9bps post data. The Canadian dollar was little changed to the USD because of soft US core PCE that was up by just 0.2% m/m SA and that took some wind out of the USD. Pricing for next ... (full story)