We have a pretty tranquil session ahead in terms of data releases. The main highlights are the US PCE report for July and the Canadian GDP.
The Core PCE is expected at 2.9% Y/Y and 0.3% M/M. Unless we get notable deviations, I don’t expect the market to react to it too much given that the PCE can be accurately forecasted from the US CPI and PPI reports. Fed Chair Powell in his speech did mention that they expect Core PCE to come at 2.9% Y/Y.
The focus will remain on the labour market data due next week when we get the ISM PMIs, the ADP and the NFP report.
The Canadian GDP for June is expected at +0.1% vs -0.1% prior and the Q2 annualised figure at -0.6% vs 2.2% prior. I don’t think it will change much for the BoC as the more timely data has been improving and the underlying inflation rate continues to hover around 3%.
In terms of market pricing, we have 54 bps of easing priced in for the Fed (2 rate cuts) and 24 bps for the BoC (1 rate cut). By the end of 2026, we have 132 bps for the Fed and 33 bps for the BoC. In my opinion, there are too many rate cuts priced in for the Fed but the data in the next months will have the last word.
We have also the final University of Michigan Consumer Sentiment report later in the session, but it’s unlikely to matter much unless we get some big revisions for inflation expectations figures
