Canadian GDP misses in August, but not enough to scare markets – TDS
Analysts at TD Securities (TDS) offered their take on Thursday's release of the monthly Canadian GDP report, which fell short of market expectations and came in to show a modest 0.1% growth in August as compared to 0.2% expected.
Key quotes:
Industry-level GDP rose by 0.1% in August, slightly below the market consensus for 0.2% m/m. However, details were slightly more constructive, with output higher in 14 of 20 industries, and we continue to track Q3 GDP (1.2%) near BoC projections (1.3%).
Despite the headline miss, this report is unlikely to weigh heavily on the BoC's outlook. Markets are now pricing in a 33% chance of a December rate cut, and we remain comfortable with our call for the Bank to wait until January before shifting off the sidelines.
Rates: Modest market reaction following the release, however this follows a very large move lower in the Canadian rates following yesterday's BoC announcement. This report confirms the buy/receive Canadian rates narrative.