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This morning, all eyes were on GDP to hint at what the Bank of Canada (BoC) will do at their December 11th meeting.

The numbers.

  • Q3 GDP: 1.0% (vs. 1.1% expected).
  • September MoM GDP: 0.1% (vs. 0.3%).
  • October Advanced Estimate: 0.1%.
  • GDP YoY: 1.6%, as expected.

 

The implications. 

The Q3 number will not raise eyebrows, but the September print and October estimate point to slower growth in Q4.  If the 0.1% MoM trend continues, it would imply a Q4 growth of 1% versus the BoC forecast of 2%.

Following the government’s ‘Santa Stimulus’, the market leaned towards a 25 bps cut in December.  Today’s data puts 50 bps back on the table.  Yields are lower by 8 bps, with various factors contributing to the move.

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