STIR: Market Nearly Evenly Split Between 3 Or 4 BoE Cuts In '25

Prime Minister Justin Trudeau is set to begin a press conference in the coming minutes announcing his intention to stand down as leader of the centre-left Liberal Party of Canada (LPC). Livestream of CTV expected to show the presser in full can be found here. 

• Once Trudeau's resignation presser is over, attention will swiftly turn to the emergency caucus meeting of LPC MPs taking place on Wednesday 8 January. The meeting is expected to last around six hours, with MPs seeking to nail down the process of how a new leader will be elected.
• The LPC constitution lays out the procedure for electing a new party leader. Following a 'Leadership Trigger Event' (which Trudeau's resignation will count as) the LPC National President must convene the National Board of Directors to take place within 27 days. This board meeting can appoint an 'interim leader', set the date of the election, and establishing the Leadership Vote Committee.
• Highlighting the potentially lengthy period of the contest, those seeking the LPC leadership are obliged to "deliver to the National President, at least 90 days before the day of the Leadership Vote, a written nomination...."
• The constitution does lay out the potential for bypassing this lengthy process, saying if by a three-quarters margin the National Board "determines that political circumstances require that the date be reset to another date," the process can be accelerated. 

• +5,000 TUH5 102-24 (+.12), buy through 102-23.88 post time offer at 1040:36ET, DV01 $192,000. The 2Y contract trades 102-24.25 last

Factory orders came in stronger than expected in November when accounting for upward revisions in the final Manufacturers’ Shipments, Inventories, & Orders report, though core capital goods orders were slightly weaker than they first appeared. 

• The 0.4% M/M fall in factory orders (vs -0.3% expected) was offset by an upward revision to October  (+0.5% vs +0.2%), while ex-transportation growth came in at +0.2% for a second month (reflecting a 0.1pp upward revision to prior).
• Broader durable goods orders were revised down slightly (-1.2% vs -1.1% prelim), due to slower growth in machinery orders than previously estimated (-0.6pp to +0.4%). Core capital goods orders growth was revised down to 0.4% M/M from 0.1% (0.7% prelim), with core shipments down to 0.3% (0.5% prelim).
• The latter figures meant that while November was a fairly solid month in the context of a poor 2024 for core capital goods, the preliminary estimates painted an overly flattering picture.
• Despite the downward core revisions, we note the final data were still much better than expectations vs the preliminary release (core cap goods orders had been expected +0.1%), and we continue to regard the data as indicative of stabilizing domestic durable goods orders. That should translate into more solidity in broader business investment. Core capital orders have been positive for the past couple of months on a Y/Y basis (0.8% in Nov, after 0.7% in Oct), with shipments flat on a Y/Y basis (after 6 negative months).
• Though as broader surveys indicate (including ISM Manufacturing and MNI Chicago PMI), the manufacturing sector appears to have improved since a summer bottom even if activity remains weak.