In early May (the 18 th ) I discussed Q1 GDP performance that was then estimated to be around 3.2%, but many economists anticipated that this was a misread, and that the actual number would be much higher – around 5.5%. The actual headline number at 6.1% is 0.6% higher than most economists had expected then (and about 30 bps higher than the street expected last week). This is a strong signal for the Bank of Canada to tightening and increase interest rates – in fact, the futures market has already priced in a 130 bps increase in interest rates. Because interest rate increases are like potato chips – you never eat just one (analogy from David Rosenberg). Q4/2009 and Q1/2010 are the arguments for an increase in interest rates. However, looking at a few other macro data points: Canada ’s current GDP is at the same level it was in Q1/2007. Canada ’s GDP is 2.5% lower today than it was 2 years ago Manufacturing export volumes are 20% lower...
Life of a Norfolk farmer