- Prelim July release was -2.0%
- Prior was +1.1% (revised to +1.0%)
- August prelim estimate +0.4%
- July ex autos -3.1% vs -1.2% expected
- Ex gasoline and autos -0.9%
- June ex autos +0.8% (revised to +0.6%)
- Sales down in 9 of 11 subsectors
Though the August number indicates a small bounce, this is a poor report. It comes on the heels of two weak jobs reports as well and suggests that Bank of Canada rate hikes are hitting hard. The most-recent inflation data was below estimates as well. The BOC was the first central bank to hike and it should be the first one to pivot to pausing as well.
The market is fully priced for 50 bps in October but December pricing for 25 bps is at 80% with a terminal top sitting at 4.07% (current 3.25%). A solid spread between the Fed (top at 4.70%) is opening up and could widen on BOC dovishness. The next major event for the BOC is an Oct 6 speech from Governor Tiff Macklem -- that will be one to watch.