Economics

Utilizing the might of the US economy, President Trump appears to be squeezing the White House’s far reaching power to the last drop. In the Week Ahead report, Deputy Chief Economist, Benjamin Tal, makes a case for and against the president’s next steps.

Is the current trade dispute with the US a catalyst to diversify Canada’s trade away from its neighbor south of the border?

Canadian diplomatic efforts in Washington should be calling attention to the surplus that the US currently runs with Canada. Chief Economist, Avery Shenfeld, shares some insights on this surplus investment flows from Canada and how that ties into the overall shape of America’s balance of payments with other countries.

G10 currencies start the day quiet, but mixed into US CPI this morning, with the greenback close to unchanged as weakness in select majors (CAD, AUD, NZD, JPY, CHF) are somewhat offset by a slightly stronger EUR.

Avery Shenfeld, CIBC’s Chief Economist is joined by his colleague, Senior Economist Ali Jaffrey, to discuss the threat of tariffs being posed by the United States and the implications for Canadian growth, inflation and interest rates.

Global risk sentiment has been little impacted by Trump’s latest tariff threats, with global equities and most commodities higher.

FX markets are relatively quiet ahead of the NFP number in the US, and the LFS in Canada.

Anyone concerned about deficits, taxes, tariffs, renewable energy, and just about everything that impacts the US budget will be watching the US Capitol House in the next few days.

In the first episode of 2025, Ian is joined by Aaron Carter from the financing desk to discuss recent adjustments in the short-end. The show begins with the duo discussing the importance of the Bank of Canada’s move to change the way monetary policy is implemented, namely moving back into a corridor system. Aaron gives his ‘big picture’ view on why this is a real game-changer for CORRA, and his expectations around the evolution of the spread to the target rate. Ian takes time discussing the various administered rates in the Canadian short-end and how to think about the subset of arbitrage opportunities. Aaron finishes the episode by describing the incoming tri-party repo system and how that will interact with monetary policy going forward.

Global equities ex-US are generally higher, while rates are roughly rangebound to start the morning.

The greenback remains offered for a third session in a row as the market unwinds the tariff trade.

The trade war could begin tomorrow, or maybe we will get a delay. A lot remains unclear and if it begins, no one knows how long it will last, or whether further rounds of retaliation are in store...

Tariff headlines are driving markets, with equities lower and global rates ex-US lower. US Treasuries are twist flattening, while oil prices are higher, given the tariff on Canadian oil.

FX markets have stabilized overnight as Trump fails to deliver more information on oil tariffs yesterday evening, and instead focused his attention on BRICs.

Its still anyone’s guess what, if anything, February 1st will reveal about US tariffs on Canada and Mexico. An announcement of some sort now seems likely, since President Trump might feel that he’s boxed himself into that date.

Let’s just count them: Bank, Fed, tech earnings, 2.5% universal tariff, 25% Canada/Mexico tariff, Latam central banks (we have Brazil today), ECB tomorrow) …

Risk off as sentiment grows that China’s DeepSeek poses risks to the sky high valuations of large tech shares; NASDAQ futures are down about 4%.

Having already cut interest rates to the top of its estimated neutral range, the Bank of Canada is now able to fine tune, and in next week’s decision policymakers will be balancing some better economic signposts against heightened threats to the outlook ahead.

The overnight session witnessed the latest attempt by the Chinese authorities to boost the domestic equity market.

Trump’s tariff threats are broadening so while the data calendar is relatively light in North America, the market remains ultra vigilant to headline risk as we enter Day 3 of the Trump White House.