NATGAS: Gas Summary At European Close: TTF Falls

Canadian GDP by industry came in at the -0.3% M/M expected in October from both the advance estimate and consensus. This more than reversed the September gain of 0.24% M/M (the unrounded October figure was -0.34%) and leaves GDP effectively flatlined vs the start of the year, with the monthly growth rates continuing to print in erratic fashion with positive readings followed the next month by negative growth over much of the year. 

• On balance it probably lessens the impetus for a Bank of Canada rate hike in the near future. Q4 is tracking to post a sharp slowdown in GDP growth from Q3's 2.6% Q/Q SAAR, with a contraction not out of the question given the very weak October start to the quarter.
• Recall that Q3 easily beat the BOC's October MPR estimate of +0.5%, so the level of GDP is already higher than expected (not to mention large revisions to prior years in the interim), but the +1.0% projected for Q4 may prove to be too high.
• The StatCan advance estimate for November showed a bit of traction in activity, with a 0.1% M/M growth rate projected ("Increases in educational services, construction and transportation and warehousing were partially offset by decreases in mining, quarrying, and oil and gas extraction and manufacturing."). Indeed positive advance retail and wholesale sales estimates for November suggest a bit more economic solidity in the month.
• But the Y/Y growth rate has slowed to 0.3% in Oct and (est) 0.7% in Nov, with the 3M/3M annualized growth rate having slowed to 0.8% after a 2.1% rate in September pointed to a strongly positive Q3 quarterly GDP reading (2.6% Q/Q SAAR).
• As for October, growth contracted across both goods producing (-0.7%) and services (-0.2%) industries. That included contractions in manufacturing (-1.5%, subtracting the most from GDP), wholesale trade (-0.9%), retail (-0.6%, impacted by labor activity in B.C.), construction (-0.4%, firsrt decline in 6 months), public sector (-0.3%, including educational services which fell on an Alberta teachers' strike) and mining (-0.6%, with oil and gas contracting following 4 consecutive expansions), with real estate (+0.2%) and public administration (+0.1%) ekeing out gains.

The Richmond Fed manufacturing index saw a relative improvement in December as it bucked the trend from three other regional Fed surveys which had all deteriorated. A sideways and noisy recent pattern makes it hard to get a sense of trend in current activity although six-month ahead expectations of local business conditions saw a solid improvement after prior increases in new orders and shipments. 

• The Richmond Fed manufacturing index fared a little better than expected in December, rising to -7 (Bloomberg cons -10) after -15.
• It broadly continued a recent run of oscillating between -4 and -20 in 2H25 in patterns that have largely been seen in new orders albeit with some greater volatility (latest -8 after -22).
• Six-month ahead expectations of local business conditions offered a stronger take though, rising to 16 after the 1 in November was its first positive since February.
• This improvement follows a previous increase for new orders (27 after 26 in Nov and 12 in Oct) and shipments (28 and 25 in Nov and 13 in Oct) which was largely cemented this month, although the number of employees index also saw a reasonable increase this month (8 after -1 in Nov and 2 in Oct).
• Back to current indicators, the sequential increase goes against deterioration seen in the other regional Fed surveys with Empire at -3.9 after 18.7, Philly at -10.2 after -1.7 and Kansas at 1 after 8.
• The average of these four regional Fed surveys fell to -5.0 in Dec from 2.5 for its lowest since June, pointing to downside momentum risk to ISM manufacturing (released Jan 5). We’ll revert on the latest for manufacturing indicators after Dallas (Dec 29) and the MNI Chicago PMI (Dec 30). 

• RES 4: 113-09   76.4% retracement of the Nov 25 - Dec 10 bear leg
• RES 3: 113-07   High Dec 3
• RES 2: 112-31/113-00+ High Dec 18 / 61.8% of Nov 25 - Dec 10 leg 
• RES 1: 112-21+ 50-day EMA
• PRICE:‌‌ 112-07 @ 15:57 GMT Dec 23
• SUP 1: 112-01+/111-29 Low Dec 23 / 10 and the bear trigger
• SUP 2: 111-19   1.236 proj of the Oct 17 - Nov 5 - 25 price swing
• SUP 3: 111-11   1.382 proj of the Oct 17 - Nov 5 - 25 price swing 
• SUP 4: 111-00   Round number support 

Treasuries fell sharply on the back of the stronger-than-expected US GDP print, opening a sizeable gap with key short-term resistance into 112-31, the Dec 18 high. Renewed weakness here would refocus attention on 111-29, the Dec 10 low and a key short-term support. A breach of this support resumes the bear cycle that started Oct 17. Instead, clearance higher would signal scope for a stronger corrective phase and open 113-00 initially, a Fibonacci retracement point.