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Some good news out of Canada not so good news for rates out of USA
Inflation data came in very positive in Canada at 3.8% despite market forecasting of 4%. Great news! Below market!
Unfortunately this news from the US appears to be offsetting the positive inflation news we got here in Canada. Lots of time to go in the day and hopefully the Canadian bond market sees this inflation news positively in terms of any future rate hikes.
Canada 5 Year Government Bond:
Last Updated: Oct 17, 2023 8:39 a.m. EDT
%4.308
+0.043
Canada Inflation Data:
The annual inflation rate in Canada fell to 3.8% in September of 2023 from 4% in the previous month, below market expectations of 4% and halting two consecutive accelerations in price growth. The result further strengthened expectations that the Bank of Canada will refrain from further rate hikes in the current cycle. Inflation fell for food and beverages (5.9% vs 6.8%), largely due to softer price growth for groceries (5.8% vs 6.9%). On a monthly basis, the CPI fell by 0.1%, the first reduction of the year. source: Statistics Canada
The Consumer Price Index in Canada decreased 0.10 percent in September of 2023 over the previous month. source: Statistics Canada
United States Retail Sales Data:
Retail sales in the US advanced 0.7% mom in September 2023, following an upwardly revised 0.8% rise in August and beating forecasts of a 0.3% advance. The data continues to point to robust consumer spending despite high prices and borrowing costs. Sales at miscellaneous store retailers recorded the biggest increase (3%), followed by non-store retailers (1.1%), motor vehicles and parts dealers (1%) and gasoline stations (0.9%). Retail sales are not adjusted for inflation. source: U.S. Census Bureau
Inflation data came in very positive in Canada at 3.8% despite market forecasting of 4%. Great news! Below market!
- Month over Month the number is actually NEGATIVE 0.1%. Terrific.
- This data should lead to a decrease in bond yields this morning, but it did not. Bond yields are up 4.3 bps to 4.308% as of 8.39am.
- The United States announced their Retail Sales Data and it is through the roof. Americans continue to spend. 70% of the US GDP is consumer spending and so long as Americans increase their spending, it’s Inflationary. The retail sales number came in more than double the market forecasts.
- The US 10 Year Treasury markets are taking this news as a negative sign to inflation (future Fed increases) in the US and US Treasury yields are up 10 bps.
Unfortunately this news from the US appears to be offsetting the positive inflation news we got here in Canada. Lots of time to go in the day and hopefully the Canadian bond market sees this inflation news positively in terms of any future rate hikes.
Canada 5 Year Government Bond:
Last Updated: Oct 17, 2023 8:39 a.m. EDT
%4.308
+0.043
Canada Inflation Data:
The annual inflation rate in Canada fell to 3.8% in September of 2023 from 4% in the previous month, below market expectations of 4% and halting two consecutive accelerations in price growth. The result further strengthened expectations that the Bank of Canada will refrain from further rate hikes in the current cycle. Inflation fell for food and beverages (5.9% vs 6.8%), largely due to softer price growth for groceries (5.8% vs 6.9%). On a monthly basis, the CPI fell by 0.1%, the first reduction of the year. source: Statistics Canada
The Consumer Price Index in Canada decreased 0.10 percent in September of 2023 over the previous month. source: Statistics Canada
United States Retail Sales Data:
Retail sales in the US advanced 0.7% mom in September 2023, following an upwardly revised 0.8% rise in August and beating forecasts of a 0.3% advance. The data continues to point to robust consumer spending despite high prices and borrowing costs. Sales at miscellaneous store retailers recorded the biggest increase (3%), followed by non-store retailers (1.1%), motor vehicles and parts dealers (1%) and gasoline stations (0.9%). Retail sales are not adjusted for inflation. source: U.S. Census Bureau