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Today’s inflation numbers provided some ammunition for the hawks:

Canada’s core consumer prices and retail sales came in faster than expected, signaling that overall inflation may turn around to clear the way for another rate increase this year.

The average of the central bank’s three core inflation measures rose to 1.4 percent in June, Statistics Canada said Friday from Ottawa, up from a May reading of 1.3 percent that was the lowest since 1999. Retail sales doubled economist forecasts for May with a 0.6 percent increase, bringing the year-over-year gain to 7.3 percent, more than double the average over the last decade.

Canada’s dollar strengthened a fourth day as the reports lined up with Bank of Canada Governor Stephen Poloz’s argument that inflation will shrug off some temporary weakness and move back toward his 2 percent target over the next year.

S&P downgraded Manitoba:

• •Although Manitoba is taking clear steps to improve its fiscal sustainability in the long term, it faces large projected budget deficits and further growth in its already-high debt burden over the next two years.
• •We are therefore lowering our long-term issuer credit and senior unsecured debt ratings on the Province of Manitoba to ‘A+’ from ‘AA-‘.
• •The stable outlook reflects our expectations that, in the next two years, the government will implement the medium-term measures to control costs that were introduced in its 2018 budget, putting it on a gradual path to fiscal sustainability.

…
The downgrade reflects the large, expenditure-driven structural deficits currently facing Manitoba. The current government, in power for a little more than a year, has laid out a seven-year path back to operating balance mostly through restructuring its cost base. While these steps bode well for strengthening budget performances in the medium term, they will not prevent the government from posting large after-capital deficits over the next two years, in our view. We expect borrowing needs associated with these deficits to keep Manitoba’s debt burden well above that of its Canadian provincial peers.

This entry was posted on Friday, July 21st, 2017 at 6:50 pm and is filed under Market Action. You can follow any responses to this entry through the RSS 2.0 feed. You can leave a response, or trackback from your own site.