CANADA: House Should Return To Pass Tariff Relief, Singh
Jan-30 16:01
Marieke Walsh at the Globe and Mail reporting comments from NDP Leader Jagmeet Singh, speaking on the response to US tariff threats at a press conference alongside union representatives.
- Walsh notes that Singh says his, "timeline to vote down the government at the end of March has not changed but they want the House to return before then to pass tariff relief."
- Singh: "We need to stop these tariffs before they happen. We need retaliatory tariffs. We need to stop the flow of things that the States need, like critical minerals, but we also need to put in place better protections for our workers."
- Singh: "I'm demanding that the Liberal government call back Parliament. Let's put before Parliament a package to protect workers, support workers that are impacted by these tariffs."
- Singh: "Let's pass legislation that supports workers, because we're going to have an election in the spring. Nothing changes around that. We are going to be voting down the government in March, but there's still two months."
- The Canadian Press notes: "While all three main opposition parties have said they intend to bring down the government in a confidence vote at the earliest opportunity, Parliament is currently prorogued as the Liberals choose a replacement for outgoing Prime Minister Justin Trudeau."
- Trump's Commerce Secretary nominee, Howard Lutnick, indicated in a Senate hearing yesterday that Canada can avoid tariffs if they show the US "respect" and "shutdown" the border to migrant and narcotic flows.
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FOREX: EURUSD Now Down 0.4% as Month End Approaches
Dec-31 15:48
- Worth noting the single currency has been under some pressure as we approach the month/year end WMR fixing window. EURUSD has extended session decline to 0.40%, to a fresh weekly low of 1.0361, while EURGBP is also down 0.3% on the session at 0.8268.
- As noted, 1.0335 remains key for EURUSD, the Nov 22 low and a bear trigger.
- For EURGBP, 0.8223 is the next support, the Dec 19 low, before major support at 0.8203.
US DATA: House Prices Continue To Rise, But High Rates To Maintain Headwinds
Dec-31 15:47
House prices rose a little more strongly than expected in October, though overall gains remained fairly steady from a longer-term perspective.
- The S&P CoreLogic/Shiller 20-city home price index rose by 0.3% M/M (0.2% expected/prior), putting the Y/y measure at 4.22% (4.1% expected, 4.6% prior). The broader FHFA house price index rose by 0.4% M/M as expected, vs 0.7% prior.
- By most measures, housing valuations remain stretched (vs affordability/rates, rental yields), though this has not translated into softer prices. Recent momentum is mixed: on a 3M/3M annualized basis, FHFA prices were up 5.1% in October (highest since April), though S&P 20-city softened to a 17-month low 3.8%. Those are fairly typical figures for pre-pandemic house price trends.
- Prices have remained supported amid historically low turnover in the housing market, exacerbated by high mortgage rates.
- At some point the standoff between buyers and sellers will end, potentially when unemployment increases and/or mortgage rates drop. As it stands, expectations are for housing market activity to pick up in 2025 (existing home sales are seen at a 3-year high with new home sales at a 4-year high), with building permits/starts at the highest in 2 years. That's alongside a very modest softening in the labor market (4.3% unemployment), with long-end rates falling (10Y Treasury yields 4.1%).
- Economic solidity and solid household balance sheets (in part due to elevated house prices) should prevent too severe a deterioration in the housing market next year, though optimism over residential construction activity and home sales looks misplaced given higher rates.
EUROPEAN INFLATION: MNI Eurozone Inflation Preview - December 2024
Dec-31 15:12
Services Momentum To End Year On A Soft Note?
- The holiday season stretches the December Eurozone inflation round over two weeks this year. It also has limited the number of analyst expectations for the data to only a handful, which centre on a higher headline number underpinned by energy base effects, for a current MNI median Eurozone estimate of 2.4-2.5%.
- That would represent a pickup from 2.2% prior, though core inflation is seen steady at 2.7%. MNI will provide updates on any changes to consensus as we emerge from the holidays.
- There are expectations that service inflation could moderate slightly in December vs November, but that would still leave services HICP in the 3.8-3.9% Y/Y area (3.9% Nov).
- Methodological issues are a key theme, both in terms of assessing the apparent softening of seasonally-adjusted sequential services inflation in recent months, and looking ahead, to January's annual category repricings / reweightings.
- While markets fully expect a 25bp cut at the next ECB meeting in January, they currently price only a 10% implied chance of an outsized 50bp cut – well off dovish extremes of around a one in three chance expected towards the end of November.
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