Canada's Economy Slows Amid Tariffs and High Yields

CIBC Capital Markets expects Canada's economy to slow down in the third quarter due to various factors, including tariffs and high yields. According to the bank's weekly outlook, Canadian gross domestic product (GDP) is likely to fall by 0.1% month over month in July, compared to a 0.1% increase expected by the market and a 0.3% rise in June.

The bank attributes this slowdown to manufacturing, retail, and wholesale activity, which may have given back some of their earlier gains. Additionally, energy exports declined in volume terms.

This weakening growth trend is likely to continue into the fourth quarter, with CIBC expecting an annualized 1.5% growth rate during that period. The bank also notes that higher long-term borrowing costs could reduce the need for central banks to raise policy rates as aggressively as markets currently expect.