Traders Overlooked Dovish Hints in Bank of Canada Decision
Dow Jones
Yesterday
0859 ET - Traders ignored some key passages from the Bank of Canada's policy decision that signal no imminent change in the policy rate, says David Rosenberg, economist and head of Rosenberg Research. Canada yields moved higher following the decision due to Governor Tiff Macklem's heightened concern about inflation risks. Rosenberg notes BOC described solid 2Q growth as influenced by temporary factors, and acknowledged heightened uncertainty due to an escalating US-Canada trade conflict. "Hardly an endorsement of a bullish macro backdrop," Rosenberg says. He adds the BOC says labor demand "remains subdued," and that spare capacity remains. The day wording like that is absent from BOC communications "will be the day that we will need to prepare for a shift" in policy, Rosenberg says.
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