BOC: Macklem Eyes Firmer April CPI, "Not-So-Bad" Scenario Playing Out
May-23 20:25
BOC Gov Macklem interviewed in the Globe and Mail (link - paywall) notes that the April CPI report showed price pressures on the high side, and that he'll be watching upcoming data closely going into the June decision (he was interviewed before Friday's retail sales release). June cut pricing firmed slightly following publication but a 25bp cut remains a marginal prospect (28% prob vs 26% pre).
- On April inflation: "The headline number did come in a bit stronger than we were expecting...There is also, though, more volatility in underlying inflation. In the last number of months, in particular, we’ve seen big swings in travel tours, and that’s about 1 per cent of the CPI. Looking through, yes, you’re seeing food price inflation up a bit. So there are some components that are a bit firmer."
- On upcoming data: "Obviously, we’re getting retail trade data Friday. We’ll get the national accounts next week. So we’ve got a number of things still to come before we get to our next monetary policy decision."
- Re how the economy has changed since the April MPR: " In the April MPR, we had these two scenarios: the not-so-bad scenario, scenario one, and the really bad scenario, scenario two. We’re still somewhere in between those, but I think the direction of travel has been more toward scenario one. My hope is that by the time we get to July, we can move back to a more conventional forecast, or at least a central scenario with perhaps a couple of risk scenarios around that. Uncertainty has come down. But look, it’s still elevated. There’s still work to do. Hopefully it continues to come down and we can get back to a central scenario. And I just I hope I’m not disappointed in that hope."
Want to read more?
Find more articles and bullets on these widgets:
Historical bullets
US TSYS: Trade Wars Are Not an Easy Win, Negotiations Take Time
Apr-23 20:13
- Treasuries finishing near late session lows, curves continue to unwind Monday's sharp steepening with short end rates weaker vs. Bonds. Busy session for chasing tariff related headline risk.
- Treasuries opened higher as Pres Trump softened his stance on sacking Fed Chair Powell and reducing China tariffs, improved sentiment also lifting S&P eminis with ESM5 futures tapping 5499.75 high.
- Rates gapped higher briefly on a WSJ article that rehashed possible China tariff cuts, but support was short lived as markets assessed potential reductions, non-unilateral negotiations as well as comments from Tsy Sec Bessent's "in need of a rebalancing".
- US Treasury Secretary Bessent further stated that there is no unilateral offer from Trump to cut China tariffs, and that a full China trade deal could take two-to-three years.
- Tsy Jun'25 10Y futures currently -3.5 at 110-22 vs. session high of 111-18.5. Initial technical support at 110-15 (Apr 15 low) followed by 109-08 (bear trigger). Curves holding flatter profiles but off lows, 2s10s -5.713 at 52.252 (46.527 low), 5s30s -6.569 at 81.760 (77.371 low).
- Cross asset: Bbg US$ index near session high currently +6.84 a t 1228.46; stocks firmer but well off highs: SPX eminis +90.50 at 5405.25 (5499.75 high), Gold cratered: down over 103 at 3277.5 earlier trades 3295.5 at the moment, crude retreated as well (WTI -1.36 at 62.31).
USDCAD TECHS: Corrective Bounce
Apr-23 20:00
- RES 4: 1.4415 High Apr 1
- RES 3: 1.4296 High Apr 7
- RES 2: 1.4165 50-day EMA
- RES 1: 1.3906/4029 High Apr 17 / 20-day EMA
- PRICE: 1.3871 @ 16:29 BST Apr 23
- SUP 1: 1.3781 Low Apr 21
- SUP 2: 1.3744 76.4% retracement of Sep 25 ‘24 - Feb 3 bull run
- SUP 3: 1.3696 Low Oct 10 2024
- SUP 4: 1.3643 Low Oct 9 ‘24
A bearish theme in USDCAD remains intact for now despite Wednesday’s spot rally. Fresh cycle lows continue to highlight a resumption of the downtrend and signal scope for a continuation near-term. Potential is seen for a move towards 1.3744, a Fibonacci retracement. Moving average studies are in a bear -mode position, highlighting a dominant downtrend. First resistance to watch is 1.4029, the 20-day EMA.
PIPELINE: Corporate Bond Roundup: $4B Walmart Leads Midweek Supply
Apr-23 19:42
$11.85B to Price Wednesday
- Date $MM Issuer (Priced *, Launch #)
- 04/23 $4B *Walmart $750M 2Y +22, $750M 2Y SOFR+43, $1B 5Y +37, $1.5B 10Y +52
- 04/23 $2.25B #QXO Inc. 7NC3 6.75%
- 04/23 $1.5B *OCP $750M 5Y +235, $750M +10Y +260
- 04/23 $1.25B *Rentokil Terminix $750M 5Y +115, $500M 10Y +135,
- 04/23 $1B *Jane Street 8NC3 6.75%
- 04/23 $750M *Bank of Peru 10.25NC5 6.5%
- 04/23 $700M *Guardian Life 5Y +80
- 04/23 $400M *Hanwa Futureproof 3Y +95
