Paul-André Pinsonnault, an analyst at NBF Economics and Strategy, explained that the U.S. economic indicators remain consistent with economic growth well above potential in 2018.
Key Quotes:
“Assuming the global economic outlook is not derailed by political drama or international trade tensions, we see Q4/Q4 U.S. GDP growth of 2.8% this year. That pace will imply further monetary policy normalization. Our economic projections lead us to see appropriate fed funds rates of 2.25% in December 2018 and 3% a year later. As for the longer portion of the yield curve, we think this year’s economic environment will be consistent with a 10-year Treasury yield trading mostly near the upper bound of a 2.83% to 3.25% range in the second half of the year.”
“Abstracting from Italy’s political turmoil, recent economic data and the BoC policy-rate announcement have been mostly in line with our expectations, though we confess that NAFTA negotiations have not followed our base case scenario. We continue to expect that, assuming no major deterioration in the Canada-U.S. trade relationship and the global economic outlook, the BoC will deliver two more rate hikes this year, on July 11 and October 24. We are accordingly keeping our year end forecast for the Canada 10-year yield unchanged at 2.63%.”
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