Economic Indicators (Source: Scotiabank)
Bank of Canada Fires A Hawkish Warning Shot
Sep 2, 2026
October’s Bank of Canada meeting is ‘live’ and on watch for hike risk in the wake of updated communications from the Bank of Canada. The communications reinforce conviction in our forecast for at least 75bps of rate hikes starting in Q4 into early 2027.
Markets responded to the communications (here, here and here) by pushing the two-year GoC yield higher by 8bps, thereby underperforming other markets including the US. The Canadian dollar appreciated by over half a penny to the USD.
The October meeting is now priced at 10bps of a 25bps hike. December is pricing 22bps of a 25bps hike. Markets are now pricing between 75–100bps of tightening by next summer.
We’ll see what happens, but as a reminder, Scotiabank Economics is the only shop that has been forecasting tightening by year-end right back to our November 2025 forecast and way ahead of markets.
Charts 1–3 show intraday market moves around the communications.
HERE IS WHAT MATTERED
Sometimes it’s the silence that says enough ....     More >>

Featured Insights (Source: RBC Financial Group)
New developments in U.S.-Canada trade war: The impact on both economies
Aug 27, 2026
Significant new trade developments have emerged since U.S. Section 338 tariffs took effect on Aug. 22—including the introduction of Canadian government support measures, counter-tariffs, and fresh U.S. threats against Canada’s auto sector.
This report builds on our earlier analysis to address the most pressing questions we’re receiving amid an evolving trade environment that impacts both economies.
1. Has intensification of the trade war altered your growth outlook for Canada this year?
Our base case outlook hasn’t changed—we remain cautiously optimistic about Canada’s near term growth.
But, recent measures have taken some shine off signs of building economic momentum, and tilted the balance of risks around that forecast towards the downside.
Those risks are largely tied to the potential of further escalation in the U.S.-Canada trade war rather than current measures.
New tariffs imposed in August will be significant for specific sectors and industries. Individual businesses unlucky to be caught ....     More >>

TD - The Weekly Bottom Line - Aug 28, 2026
Canadian Highlights
- Real GDP grew at its fastest pace since 2023 in the second quarter, rising 3.3%. Growth was driven by strong goods exports, a rebound in business investment and solid household spending.
- However, new U.S. tariffs could have a moderate impact on Canadian GDP growth over the next year, while Canada’s reciprocal tariffs could have only a marginal impact on growth but add modestly to inflation.
- Amid renewed trade tensions, foreign demand for Canadian portfolio assets remains strong – a good sign for a country looking to spur an investment supercycle.
U.S. Highlights
- In his Jackson Hole keynote, Fed Chair Kevin Warsh delivered a hawkish assessment, prompting market odds to shift firmly toward a near-term rate hike.
- The second estimate of Q2 GDP left headline growth unchanged at 1.5% annualized, but revised growth in real final sales to private domestic purchasers up moderately to a strong 4.2%.
- July’s PCE report offered little evidence of renewed disinflation, with core inflation remaining well above the Federal Reserve’s 2% target.