As the Bank of Canada pauses its interest rate hikes, investors are betting that the sensitivity of Canada's economy to higher borrowing costs will result in a historically large gap between the tightening campaigns of the BoC and the U.S. Federal Reserve.

Analysts have long argued that Canada's economy is more sensitive to interest rate hikes than the U.S. economy, pointing to the higher debt loads of Canadians after they participated in a red-hot housing market in recent years and the shorter Canadian mortgage cycle.

But now some major economic data has given substance to that view and supports the market's recent move to price in a wider gap between the end points for interest rate hikes in Canada and the United States, say analysts.

(Continue Reading – Reuters)

The European Commission will propose extending emergency gas demand reduction measures until next year to ensure it is well prepared for the coming winter, energy chief Kadri Simson said

The current voluntary target to cut consumption by 15% is set to end this month, and prolonging it is necessary to ensure enough supply for the next heating season, Simson told lawmakers Thursday. The European Union managed to reduce demand by nearly 20% over this winter.

“It’s the best guarantee to achieve another great level of storage by November,” Simson said. “This year will be challenging, and the year after that as well. Many uncertainties remain.”

(Continue Reading – Bloomberg)

Inflationary pressures in the world’s second-largest economy eased more than expected in February after a post-reopening spike, a sign of the limited boost from the lifting of strict “zero Covid” curbs for domestic demand.

Consumer prices gained 1% in February compared with a year earlier, slower than the 2.1% increase recorded in January, led by a deceleration in food-price increases, China’s National Bureau of Statistics said Thursday. The result also undershot by a wide margin the 1.7% increase anticipated by economists polled by The Wall Street Journal and was the lowest reading since the 0.9% gain recorded in February 2022.

The drop in consumer-price growth was driven by “a pullback in demand after the holiday as well as ample market supply,” said Dong Lijuan, a senior statistician with the statistics bureau.

(Continue Reading – WSJ)