After months of negotiations and looming tariffs, Canada finally agreed to a revamped trade deal with the U.S. and Mexico. The “United States-Mexico-Canada Agreement” (USMCA for short) will replace NAFTA. Financial markets were indifferent to the new NAFTA, as Canada averted deepened trade wars and was able to protect the essential auto industry from steel and aluminum trade impacts “NBF Economics Canadian GDP growth forecast for 2019, which had assumed a deal would be reached, is unchanged at 1.9%. But with this earlier than-expected agreement, we’ve brought forward the timing for C$ appreciation, now expecting USD:CAD to reach 1.25 by the first quarter of next year. While the trade deal is good news, that’s not to say the job of the Canadian government is done. There are competitiveness issues to tackle.”
Despite Tariffs, Business Remains Optimistic As Bond Yields Rise
Our partners at NBF Economics offer a remarkably detailed view of current economic conditions in the U.S., Canada and the Emerging Markets. Much of the outlook remains positive, lead by the “hot” U.S. economy.
A sixth consecutive quarter of above-2% real GDP growth is in the cards for the U.S. economy. Consumption spending remained strong in Q3 buoyed by a healthy labour market and personal income tax cuts. Understandably U.S. Business remains optimistic while Bond Markets anticipate a rise in rates to combat inflation expectations.