STIR FUTURES: BLOCK: Sep'25 SOFR Buy

Monday brings some of the last key inputs into the BOC's July 30 decision - the Q2 Business Outlook Survey (BOS) and Survey of Consumer Expectations (CSCE) (Retail Sales Thursday will also be eyed) - though nothing is likely to dissuade the BOC from holding rates (~93% priced and now sell-side consensus). The Q2 survey is released at 1030ET.

• The Q1 BOS was conducted in February with Q2's conducted in May. The timing of the survey means that Q1's results were weighed down by concerns over the future imposition of US tariffs, with Q2's more likely to capture the actual incoming effect of tariffs imposed starting in March.
• Judging from multiple separate surveys since Feb/March, the Q2 report is likely to reflect less pessimism on future activity metrics including expectations for employment and sales.
• Recall the Q1 survey (headline index seen in chart below) showed the share of companies seeing inflation faster than 3% over the next two years, taking it outside the Bank's 1% to 3% target band, rose for a second quarter. It reached 23% in the latest survey, up from priors of 20% and 15%. Another 44% of respondents see inflation ranging between 2% and 3%. The CSCE saw similar results with household expectations for inflation two years ahead climbing to 3.9% from 3%.
• The share of firms planning to add workers over the next year fell to record low, though plans for layoffs were little changed. Some 32% of firms see a recession in the coming year, up from the prior 15%. Among households that figure climbed to 67% from 47%.

Some analyst expectations: 

• RBC: the BOS "is expected to show early signs of stabilization in businesses’ expectations for future sales, input prices and hiring in Q2. The likely improvement follows marked deterioration in Q1, and was during a survey period (Q2 typically spans from early to late May) when threats specifically targeting Canada had receded....the survey could highlight a divergence between sectors directly exposed to trade headwinds (such as manufacturing and transportation), which will likely maintain a softer outlook, while other sectors, particularly consumer-facing businesses, that are more positive."
• Scotiabank: "An advance indicator of small business price expectations serves as a leading indicator for the BoC’s surveys and suggests they will show less concern. A caveat is that the BoC surveys are more skewed toward larger businesses. Of course, a risk is that these are merely sentiment-driven gauges that could be stale now since Trump has been escalating tariff risks all over again."
• TD: "these will shine a brighter light on how sentiment has been impacted by tariffs vs uncertainty alone. We look for softer activity data to weigh on past/future sales indicators in the Q2 BOS, while investment/hiring intentions should also see further deterioration from Q1. Inflation expectations will provide another key focus for both the BOS & CSCE, with the recent thaw in monthly inflation expectations hinting at a partial unwind of the Q1 jump. This should give the Bank some added confidence that expectations remain anchored, even if current levels of core inflation remain an obstacle to near-term cuts."

SFIZ5 96.65/96.75 call spread paper paid 0.75 on 10K

Latest block trade lodged at 09:35:58 NY/14:35:58 London:

• SFRU5 6K lots blocked at 95.835, looks like a seller.