Confidence abounds in BoC Business Outlook Survey – TD Securities

"The Bank of Canada's Business Outlook Survey painted a broadly optimistic picture of the economy, with the overall indicator rising for the 3rd consecutive quarter (albeit modestly)," noted TD Securities analysts.

Key quotes

"Indicators of capacity pressures pointed to slightly less slack in the economy, inflation expectations were stable, and the accompanying consumer survey showed a modest increase in expected household spending. The outlook for future sales growth and investment intentions both slowed, but remained positive."

"Today's report will give the BoC grounds to largely ignore the recent slate of disappointing economic data at next week's interest rate announcement (though downward revisions to Q4 are probably inevitable). The economic backdrop is still too soft for outright exuberance from the Bank, but the results of today's surveys will make the Bank more comfortable with the current level of monetary policy on net."

"Rates: The survey was hawkish at the margin. We saw essentially zero reaction, post the release. We feel positioning is near peak hawkishness in Canada relative to the US and Europe."