EQUITIES: Rate-Sensitive Sectors Buoyed By Fed Cut Expectations

Headline CPI is seen rising to 1.9% Y/Y in June, up from 1.73% (unrounded) in May, which would mark a 3-month high. On a M/M non-seasonally adjusted basis, CPI is seen pulling back to 0.1% from 0.6% (0.55% unrounded)  prior. MNI's summary of analyst consensus is below.

• More importantly from the Bank of Canada's perspective, the average of trim/median inflation is seen basically steady, at 2.95% (MNI median, 3.00% BBG consensus), vs 3.00% in May. More specifically, Median is seen coming in at 2.9% with Trim at 3.0%.
• A strong June employment report having all but eliminated the perceived possibility of a BOC cut on July 30 (it's gone from consensus to an outlying view, and from around 1-in-3 to 1-in-7 chance per futures after last week's labour release), though the data will be closely watched by the BOC as it prepares its next set of forecasts after recent solidity in core measures.
• In its last quarterly projections in April, the BOC projected average Q2 trim and median CPI at either 2.9% or 3.0% Y/Y in its two trade war scenarios, and an in-line June report would see the "actual" at the top end of that range.

• RES 4: 1.3920 High May 21  
• RES 3: 1.3862 High May 29 
• RES 2: 1.3798 High Jun 23  
• RES 1: 1.3752 50-day EMA 
• PRICE: 1.3681 @ 16:10 BST Jul 14
• SUP 1: 1.3557 Low Jul 03
• SUP 2: 1.3540 Low Jun 16 and the bear trigger
• SUP 3: 1.3503 1.618 proj of the Feb 3 - 14 - Mar 4 price swing
• SUP 4: 1.3473 Low Oct 2 2024

Short-term gains in USDCAD appear corrective and the trend structure remains bearish. Resistance to watch is the 50-day EMA, at 1.3752. A clear break of the average would signal scope for a stronger recovery and highlight a possible reversal. For bears, sights are on key support at 1.3540, the Jun 16 low. Clearance of this level would resume the downtrend and open 1.3503, a Fibonacci projection.  

• Treasuries held a narrow range finishing near steady/mixed Monday, focus on Tuesday's June CPI inflation data and several Fed speakers ahead of Friday evening's policy blackout.
• Consensus sees core CPI inflation at a seasonally adjusted 0.3% M/M in June on a rounded basis, but with sizeable risk of undershooting at 0.2% (MNI median unrounded estimate at 0.24% M/M /average 0.25%).
• Unscheduled Fed speaker: Cleveland Fed President Hammack (non-2025 voter, hawk) reiterated her patient approach to any future policy easing in an interview with Fox Business Monday. Hammack had previously cited a wide range of estimates of neutral rates from 2% to 4.6%.
• Currently, the Sep'25 10Y contract trades +2 at 110-25 (110-20 low / 110-29.5 high), inside technicals: support at 110-17 (61.8% of the May 22 - Jul 1 bull leg); resistance above at 111-13+/111-28 (High Jul 10 / High Jul 3).
• The Washington Post reported Monday that National Economic Council director Kevin Hassett is "emerging as a leading contender to become the next chair of the Federal Reserve, according to people who have discussed the matter with White House officials".
• The latest earnings cycle with banks and financial stocks reporting tomorrow: Blackrock, JPMorgan Chase & Co, Wells Fargo & Co, Bank of New York Mellon, State Street Corp and Citigroup.