2025-06-05-Jefferies-每日加拿大人2025年6月5日_13页_286kb

Report Summary

Overview

This report, dated June 5, 2025, covers Jefferies' equity research on Canada's financial sector. Key focuses include Bank of Canada monetary policy, economic data releases, trade tensions, and valuation updates for financial institutions. Market expectations for rate cuts are weakening despite ongoing uncertainty.

Bank of Canada Update

• The BoC maintained the overnight rate steady at 2.75%, marking two consecutive rate holds after seven straight cuts since June 2024. Forward guidance suggests a potential 25 basis points cut in July if the economy weakens due to U.S. tariffs and inflation pressures, but the probability of a July cut is approximately 50%, reducing to a coin toss. Statistics Canada and Ivey PMI data, along with future inflation and GDP reports, will influence decisions. Core inflation remains elevated due to goods price increases, while BoC highlights economic weakness in the second quarter.

Macroeconomic Outlook

• Upcoming events include Statistics Canada's trade balance data and employment figures for May. Broader risks include lingering trade uncertainty from U.S. tariffs on steel and aluminum (50% higher), which disproportionately affect Canada's exports; however, talks on a new trade deal may mitigate responses. Economic confidence is noted as a key factor affecting markets.

Equity Research Highlights

• Financials performance shows mixed results (referencing Figures 1-4 for rates and curves). Equities data includes dividend yields, market caps, and 6-month performance trends. BoC implied rates indicate potential cuts, but conviction is fading. Specific company ratings:
  • Banks: BMO, TD, RBC, and SLF/GOEY are Buy; others Hold. BMO is recommended for credit growth, TD for lower credit costs.
  • Insurers: MFC and SLF are Buy; others mostly Hold. GWO faces credit issues.
• Toronto home prices increased slightly due to easing trade tensions and affordability improvements, but overall sales decreased amid economic uncertainty. Yield curves (Figure 4) show stable Canadian and U.S. rates.

Key Risks and Market Sentiment

• Trade disputes and tariffs pose risks, with Canada delaying retaliation. Reports emphasize reduced forward guidance from BoC due to uncertainties. Equity recommendations consider broader economic impacts, with buy calls on resilient companies.

Please see the accompanying report for full details and charts.