CANADA: Local Analyst Views Post CPI
Nov-16 15:53
Selection of analyst views post CPI, ranked by hawkishness in latest Bloomberg survey
- RBC: Easing inflation pressures draws BoC closer to the end of the hiking cycle. RBC continue to expect a 25bp hike in Dec to a terminal 4% but risks are still tilted to the upside. Breadth of inflation pressures continued to narrow, with 58% of the basket rising above 3% annualized over the last three months – still high, but down from a peak of 77% in July.
- CIBC: Expect another 50bp hike in Dec with the BoC having to rely on indicators of slowing growth, rather than immediate progress on inflation, to justify a pause in Q1. Still expect much lower inflation by 2H23 but need to first see downward pressure from on demand from softer job and income gains to make that happen.
- BMO: Official call of 50bps in Dec is under review but given that most measures of core inflation remain locked in a range around 5%, we continue to believe that overnight rates will ultimately need to go above 4% to eventually crack underlying inflation [had 4.5% terminal in Bloomberg survey yesterday].
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UK: Chancellor Creates New Economic Advisory Council
Oct-17 15:46
Chancellor of the Exchequer Jeremy Hunt has announced the creation of a new 'economic advisory council'. Formed of Rupert Harrison (ex chief of staff for former Chancellor George Osborne), Karen Ward (former advisor to Chancellor Philip Hammond), Sushil Wadhwani (former BOE MPC member) and Gertjan Vlieghe (former BOE MPC member).
- Hunt: “I’d like to thank the OBR…and the Bank of England…I fully support the vital independent roles both institutions play which give markets, the public + the world confidence that our economic plans are credible +rightly hold us to account"
UK: Chancellor's Statement On Mini Budget U-Turn Underway
Oct-17 15:38
Chancellor of the Exchequer Jeremy Hunt delivering statement to the Commons on the reversal of nearly all the measures announced in the 23 September mini budget by his predecessor Kwasi Kwarteng.
- Livestream: https://www.youtube.com/watch?v=jDtfioiaBMU
- Hunt: 'We are a country that funds our promises and pays our debts'.
- Hunt: 'We must take decisions of eye-watering difficulty if needed'.
- Hunt: "We need to do more, more quickly to give markets certainty'.
- Hunt: "UK economic volatility due to a lack of an OBR forecast related to the mini-budget, inflation, and interest pressures around the world'.
- Treasury tweets: "The repeals of the 2017 and 2021 reforms to the off-payroll working rules known as IR35 from April 2023 will no longer take place. This is worth around £2 billion a year."
CANADA: GoC Belly Sees Bulk of BoC Survey Impact, USDCAD Little Changed
Oct-17 15:24
- The sharpest drop in business sentiment since 2020 (from 4.9 to 1.7) and a majority of firms seeing a recession as likely in the next year leads the market reaction to the BOS/CSCE surveys.
- GoCs have rallied 2-4bps since, leaving 5-10Y tenors driving moves on the day at circa -11bps vs -6.5/-4.5bps for Tsys as GoCs fade the most recent cheapening. 2s10s -4bp to -71bps, close to recent post-1990 low of circa -75bps.
- Little net impact on USDCAD, hovering near levels seen after the strong US open, currently 1.3735 off session lows of 1.3715 vs support at 1.3704.
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