The December 2023 edition of Financial Markets Monthly from RBC Economics includes a forward-looking analysis of Canadian, US and international financial market trends.
Topic in focus
Is a softening economy risking Canada’s AAA credit rating? The Great White North stands middle to lower of the pack among AAA rated economies when it comes to key metrics that influence sovereign ratings. A large gap continues to exist between Canada and the median of AA rated economies. However, that could change quickly, given an already large government deficit and a softening domestic economic outlook.
Monthly highlights
- Softening economic growth has left central banks in Canada, the Euro Area and the UK on hold
- Persistent easing of labour market conditions in the US and early signs of slower spending have led to a flatter yield curve and weaker USD
- Slowing economic conditions are expected to spark rate cuts in 2024, starting with the Fed and BoC around mid-year
- Interest rates will be slower to come down than they were to go up
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