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Real GDP for Q1 and March surprised to the upside with contractions of 8.2% q/q (TD/market: -10%) and 7.2% m/m (TD: -7.0%, market: -8.5%), per TD Securities. There was little market impact in either rates or FX. 

Key quotes

“The Canadian economy contracted by 8.2% annualized in Q1 (TD/market: -10%), just shy of the 8.7% contraction in Q1 2009, on a sharp pullback (-9.0%) in household consumption while industry-level GDP plunged by 7.2% m/m in March, in line with TD’s forecast (-7.0%) and slightly above the market consensus for -8.5%.”

“Statistics Canada also published flash GDP estimates which point to another 11% m/m contraction for April. An 11% decline in April, along with a slightly better handoff from March, hints at a Q2 contraction in the 40% (annualized) range.”

“We remain constructive on Canadian fixed income (we especially like owning the long-end of the curve), and we like USD/CAD higher over the short-term.”