CANADA DATA: January CPI Next Week With BoC Seen Slightly More Likely To Pause
Feb-14 18:44
- Tuesday’s January CPI report is the sole CPI release since the Jan 29 decision. The market currently sees a little less than 50/50 odds of another 25bp cut on Mar 12, slightly leaning in favour of a pause, although US tariff deliberations are likely a more important factor.
- The initial 25% tariffs on all Canadian products except for 10% on energy products saw a 30-day postponement until Mar 4 after Canada agreed to bolster border security, whilst 25% tariffs specifically on steel & aluminium is currently set for Mar 10.
- With downside risks to Canadian growth, GDP data for Q4 and the January advance on Feb 28 should be watched increasingly closely after recent signs of prior monetary policy easing boosting activity.
- With those points in mind, the early days for Bloomberg consensus currently sees headline CPI holding at 1.8% Y/Y whilst median is unchanged at 2.4% Y/Y and trim inches a tenth higher to 2.6% Y/Y (BoC target range 1-3%).
- Remember that Senior Dep Gov Rogers downplayed the strength seen in CPI-trim at last month’s BoC press conference, saying the way it’s calculated has led them not to put much weight on it at this point in time. That leaves only one of its three 'new' core measures actively watched, CPI-median, having earlier in the cycle abandoned CPI-common. All else equal, we imagine this will start to see greater market focus on the more traditional core metrics such as CPIxFE and CPIX.
- The temporary GST/HST holiday will continue to impact inflation readings this month.
Want to read more?
Find more articles and bullets on these widgets:
Historical bullets
US: FED Reverse Repo Operation: Declining Usage
Jan-15 18:41
RRP usage declines to $119.977B this afternoon from $160.219B on Tuesday. Compares to $98.356B on Friday, December 20 - the lowest level since mid-April 2021. The number of counterparties retreats to 39 from 59.
PIPELINE: Corporate Debt Issuance Update
Jan-15 18:31
- Date $MM Issuer (Priced *, Launch #)
- 01/16 $1B #Citadel LP $500M 5Y +170, $500M 7Y +190
- 01/15 $750M #NY Life 10Y +70
- 01/15 $500M #NLG Global Funding 5Y +95
- 01/15 $Benchmark Dexia 5Y SOFR+73a
- Expected to issue Thursday:
- 01/16 $Benchmark CABEI 3Y +75a
- 01/16 $1B Kommuninvest WNG 3Y SOFR+37a
- 01/16 $Benchmark CDP Financial 5Y SOFR+63a
FED: Williams Sees Economic Strength & Fiscal Uncertainty Behind Higher Yields
Jan-15 18:26
- Speaking in a media scrum after an earlier appearance, NY Fed’s Williams (permanent voter) said Treasury yields haven’t been driven by inflation expectations and that yields instead reflect economic strength and fiscal uncertainty.
- There have been somewhat mixed views of FOMC members on long end yield drivers recently. Goolsbee (’25 voter, dove) on Friday said long-term yields reflected increased growth expectation and weren’t driven by inflation expectations as well, although Gov. Bowman (permanent voter, hawk) on Thursday saw higher inflation expectations at least in part attributing to moves. Barkin (non-voter) meanwhile last week said he saw term premium as a factor.
Williams’ other comments focused on balance sheet policy, with the main takeaway being that reserves are still seen as being above "ample":
- *WILLIIAMS: NOT SEEING SIGNS RESERVES FALLING TO 'AMPLE' LEVEL
- *WILLIAMS: QT NOT A FACTOR IN HIGHER TREASURY TERM PREMIUMS
- *WILLIAMS: AS RESERVES DECLINE EXPECT RRP VOLUME TO MATCH
- *WILLIAMS: NO SIGN OF DISRUPTION IN REPO MARKET, AS IN 2019
- *WILLIIAMS: NO CURRENT PLANS FOR SALES OF FED'S MBS HOLDINGS" - bbg
