STIR: Destination Remains The Same For BOC Pricing: 50bp Of Further 2025 Cuts

• Stocks quietly extended session highs in Monday's second half, SPX eminis back to March 10 levels amid a lack of any specific headline driver as policy uncertainty over global trade remains. Currently, the DJIA trades up 467.25 points (1.13%) at 41956.15, S&P E-Minis up 58.25 points (1.02%) at 5750.75, Nasdaq up 143.4 points (0.8%) at 17898.4.\
• Energy and Real Estate sectors continued to outperform in late trade, oil and gas stocks leading gainers as crude prices rebounded (WTI +.40 at 67.58): Targa Resources +3.50%, Marathon Petroleum +3.43%, Valero Energy +3.20% and ONEOK +2.85%.
• Investment trusts and management shares buoyed the Real Estate sector: BXP +4.99%, Simon Property Group +3.20%, Iron Mountain +2.91% and Digital Realty Trust +2.67%.
• On the flipside, Consumer Discretionary and Communication Services sectors underperformed in late trade, Tesla -4.61%, Garmin -1.07%, Ulta Beauty -0.80% and Deckers Outdoor -0.60%.
• Meanwhile, interactive media and entertainment shares weighed on the Communication Services sector: Meta Platforms -0.41%, Alphabet -0.21% and Paramount Global +0.04%.

• RES 4: 1.3175 High Oct 4 2024  
• RES 3: 1.3119 76.4% retracement of the Sep 26 ‘24 - Jan 13 bear leg
• RES 2: 1.3048 High Nov 6 ‘24
• RES 1: 1.2995 High Mar 17 
• PRICE: 1.2985 @ 16:25 GMT Mar 17 
• SUP 1: 1.2862 Low Mar 12     
• SUP 2: 1.2778 20-day EMA
• SUP 3: 1.2656 50-day EMA and a short-term pivot support  
• SUP 4: 1.2556 Low Feb 28      

The GBPUSD trend outlook remains bullish. Moving average studies are in a bull-mode position, highlighting a clear dominant uptrend. The pair has recently pierced a Fibonacci retracement at 1.2924, 61.8% of the Sep 26 ‘24 - Jan 13 bear leg. A clear break of this price point would open 1.3048, the Nov 6 2024 high. Initial firm support is 1.2656, the 50-day EMA.                

• Headline CPI is seen accelerating from 1.9% to 2.2% Y/Y in tomorrow’s February report, owing to a strong non-seasonally adjusted 0.6% M/M (or 0.7% M/M in the below median).
• There’s another wide range to analyst forecasts, ranging from 2.0-2.7% Y/Y in the Bloomberg survey after the 1.9% in January.
• Our review below covers 2.1-2.7%, including CIBC and JPMorgan at 2.1% and RBC at 2.5% (not in Bloomberg survey) and Scotia at 2.7%.
• This uncertainty is likely down to the ending of the GST/HST tax holiday mid-month after its two-month window started mid-Dec.
• GS on the matter: “our forecast assumes 36bp of payback following the removal of the sales tax holiday in mid-February, although we acknowledge some uncertainty around how the cumulative 56bp boost will be distributed across February and March.”
• Core CPI meanwhile (the average of CPI-median and CPI-trim), which will continue to not be directly impacted by the indirect tax changes, is seen accelerating a tenth further to 2.8% Y/Y for what would be its strongest since October.  
• Three- and six-month run rates stood at 3.0% and 3.1% annualized respectively in January.
• The BoC forecast from the January MPR saw headline CPI averaging 2.1% Y/Y in Q1 (and more recently saw it at circa 2.5% specifically in March per last week’s decision statement) and core CPI averaging 2.5% Y/Y in Q1 with those core forecasts having got off to a bad start for the quarter.
• BoC-dated OIS currently has 10-11bp of cuts priced for the April BoC decision, after the Bank cut its overnight rate target by 25bps last week to 2.75% for the middle of its estimated neutral rate range of 2.25-3.25%.