Annnd we’re back! As expected, a pretty quiet week which should repeat with the late labour day. Enjoy it while you can before September ramps up!

GDP growth in June came in ahead of estimates, the third straight up month…

… on broad-based expansion at the sector level despite a volatile macro backdrop, with 13 of 20 sectors climbing sequentially.

Wholesale trade led the gains, rising 1.7% on strength in machinery and staples…

… while retail trade trailed close behind, adding 1.4% with positive contribution from most subsectors.

On an annualized basis GDP rose 3.3%, posting the fastest growth in three years - driven by a ~5% increase in exports which tracks to the trade data we’ve seen recently.

Pairing that with the third consecutive quarter of population decline, GDP per capita growth is accelerating and household consumption per capita remains strong…

… but we’ll see if the momentum can hold, with preliminary GDP estimates for July calling for flat growth as retail trade and manufacturing soften.

Canada’s Big 6 banks delivered another solid quarter, with beats across the board led by Toronto-Dominion (TD) and Scotiabank (BNS)…

… driven by continued strength in capital markets and wealth management, which have shown more durability than most expected (including myself).

Despite the headline outperformance, credit trends drove price action - with Scotia and TD running on the biggest sequential improvement in provisioning…

… while National Bank (NA) fell more than peers as weaker credit quality in the recently acquired CWB book should result in a smaller capital benefit. With ROE trending higher for most of the group…

… valuations remain at historically elevated levels. Time will tell whether current multiples have staying power, with management teams all highlighting resilience in the face of macro headwinds.

Payroll employment growth was modest in June, rising for the fourth straight month…

… on the back of gains in public administration, which offset weakness in manufacturing and food services.

While the vacancy rate held steady at 2.8%, the number of job openings increased to 509K - another sign the labour market is starting to find its footing.

All eyes were on trade last week, with Trump slapping a 50% tariff on $28B of Canadian goods including dairy - a category we’ve run a consistent deficit with the US in for decades.

Carney retaliated with a dairy import tax of his own, which applies to ~30% of the dairy we buy from south of the border…

… and prompted Trump to up the ante, threatening 50% auto tariffs to start next year. While Ontario and Quebec would sit directly in the scope of these measures if they materialize…

… our guess is the headline has more bark than bite, with the effective date landing after midterm elections for a reason.

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