Canada Daily Briefing

The Bank of Canada boosted its two-week repo usage in response to upward pressure on CORRA (the Canadian Overnight Repo Rate Average) — a technical but significant move. Elevated US Treasury yields are spilling over into Canadian short-term funding markets, and the BoC's repo action signals preparedness to manage the transmission effect rather than let it run. Financial Post reported the Bank 'can tolerate only so much upward pressure' — the clearest hint yet of a potential rate response if yield pressure persists.

Deloitte's latest Canadian economic outlook projected slowing activity into 2027, flagging the need for improved business confidence and investment to maintain recent upward momentum. The report landed as GDP data came in soft — a combination that typically pressures BoC rate-cut expectations while raising questions about Bank of Canada divergence from the Fed. If BoC cuts while the Fed holds or hikes, CAD faces pressure and the loonie could slide toward 0.72-0.73 vs USD.

National Bank Financial's chief economist flagged that foreign investors have already poured record amounts into Canadian government bonds as federal issuance ramped up, positioning Canada for a broader investment surge. The thesis: higher Canadian yields relative to historical averages are attracting sovereign and institutional capital — a positive for CAD and the TSX. If sustained, this would counter Deloitte's pessimism, and the resolution of that divergence will likely be the dominant Canadian macro theme through Q4.