The Global Week Ahead: Promises, Promises!

Next Week's Risk Dashboard

• The final full week of Canada’s election campaign…
• …will see the main parties finally release their detailed platforms…
• …and how the PBO costs them may offer late-campaign risks…
• …but here’s what we can piece together so far
• IMF & World Bank Spring meetings to focus on tariffs, threat to the Fed
• Earnings will bring out more of the ‘Mag7’
• Global PMIs to offer fresh signs of trade war damage
• Pulse check on Canadian consumers
• How is US capex holding up?
• Europe’s trade surplus with the US will be a focus
• BI likely to hold as rupiah instability
• Russian central bank to stay on hold as inflation rises
• Other global macro

Chart of the Week

Canada enters the final full week of election campaigning ahead of the decision on Monday April 28^th. I’ve outlined what we know about the platforms of just the Liberals and Conservatives strictly because the polls indicate they are the parties most likely to form a government. We will get full platforms and costing this week that could be late-stage influences upon the campaign.

Otherwise, a relatively quiet week in terms of calendar-based risks following the Easter long weekend will bring out a relatively modest number of global indicators and a pair of regional central bank decisions alongside the intensification of US earnings with more releases from ‘Mag7’ firms. Washington will be overrun by global central bankers and finance heads at the annual Spring meetings of the IMF and World Bank (schedule here). No doubt at the top of the list will be tariffs and a potentially serious risk to Fed independence and US markets as the Supreme Court is expected to rule on Trump v. Wilcox before breaking for summer recess.

GLOBAL MACRO—PMIS TO ASSESS TARIFF DAMAGE

Global PMIs are soft indicators that have the advantage of being among the first readings on the health of the global economy and supply chains. They will dominate the global line-up of indicators and offer further assessments of the effects of the US-initiated trade war. Other readings that could be impactful to markets will include retail sales in Canada and the UK, core capital goods orders in the US, one of the world’s freshest inflation readings out of Japan and perhaps the ECB’s wage tracker.

April PMIs to Provide Fresh Assessments of Global Risks

The monthly batch of updates to purchasing managers’ indices this time for April will unfold on Tuesday and Wednesday. Australia and Japan will refresh their measures on Tuesday evening (ET) followed by the Eurozone, UK, India and US throughout Wednesday morning. Prior readings (charts 1–3) showed modest overall economic growth with composite PMI readings above 50 in the Eurozone, UK and Australia, a mild contraction in Japan, and strong growth in India. Watch for anecdotes on supply chain challenges as well as subcomponents on orders, prices, and hiring plans.

Canada Focused on Retail Sales

Canada will also update a few measures starting with producer prices for March (Tuesday) that could give an early glimpse at the effects of tariffs. The little-watched and lagging SEPH payrolls report for February (Thursday) will be followed by the more widely watched retail sales report on Friday. Advance guidance from Statistics Canada pointed toward a drop of around –½% m/m in nominal sales and we’ll get the first preliminary estimate for March.

US — How is Capex Holding Up?

Other US releases will be light and include a primary focus upon housing activity in March with new home sales (Wednesday) and existing home sales (Thursday). Durable goods orders (Thursday) should get a solid lift from Boeing orders and maybe tariff front-running such as in autos, but key will be how core capital goods orders ex-defence and air hold up.

Japanese April CPI and Korea’s Economy

Two light developments across Asia-Pacific markets will include Japanese inflation figures for April in Tokyo that will be at the leading edge of global consumer price readings when estimates are released on Thursday. It’s probably too soon to expect much of an effect but watch the core measures. Also expect little to no growth out of South Korea when Q1 GDP is released on Wednesday (ET as always).

Europe’s Trade Surplus with the US

Europe comes back from the Easter holiday long weekend to face a modest line-up of releases. Trade figures for February (Wednesday) may garner attention through the widening Eurozone trade surplus with the US (chart 4); that’s not a bad thing to most economists but it is to the Trump administration. German IFO business confidence may suffer in the April reading (Thursday). UK retail sales volumes ex-gas (Friday) have been on a roll so far this year with back-to-back gains of 1% m/m or stronger in January and February and March could continue the trend on potential tariff front-running. We may also get the ECB’s wage tracker by mid-week.

Quiet LatAm Calendars

Latin American markets face little calendar-based risk outside of Mexican retail sales in February (Wednesday) and the economic activity index as a GDP guide for February (Friday).

Chart 5 summarizes releases by day.

CENTRAL BANKS—A PAIR OF PAUSES ON INFLATION CONCERNS

Only two regional central banks will be offering decisions this week before the FOMC goes into communications blackout on Saturday April 26^th.

Bank Indonesia Has a Weary Eye on the Currency

Bank Indonesia is expected to leave its policy rate unchanged at 5.75% on Wednesday. Since the last decision on March 19^th, the rupiah has depreciated by nearly another 2%. Concern about market stability is likely to be as prominent as it was the last decision. The rupiah has weakened by about 11% to the dollar since late September as BI has cut by 50bps since September (chart 6).

Russia’s Central Bank Still Faces Rising Inflation

Russia’s central bank is likely to extend its hold on the policy rate at 21% on Friday. It last hiked in October and Governor Nabiullina has guided that tight monetary policy will be maintained for an extended period. Since its last decision on March 21^st, CPI edged even higher to 10.3% y/y with core CPI up a tenth to 9.7% y/y (chart 7). Tuck that one away in the ‘serves your right’ file!

EARNINGS SEASON INTENSIFIES

The US earnings season really takes flight this week as 117 S&P500-listed firms report. Examples of key names include several of the ‘Magnificent Seven’ such as Alphabet, Tesla, and Intel, plus other firms including Merck, GE, 3M, and Boeing. Q1 earnings are less of the issue to markets than uncertainty over the outlook in light of US recession risk. The S&P can hardly be characterized as ‘cheap’ in my opinion (chart 8).

Canadian earnings will include 17 TSX firms.

CANADA’S ELECTION—TRACKING THE DOLLARS

This will be the final full week of campaigning before Canada’s federal election on Monday April 28^th. A lot is at stake for the country based on a comparison of significantly different policy offerings from the two parties that are most likely to form a government.

It’s the Liberals’ Election to Lose

Chart 9 shows current attempts at translating polls into seats. The website 338canada.com (here) indicates that the Liberals will win 193 seats for a twenty-one seat majority versus the Conservatives at 121 seats, the BQ at 20, the NDP at 8 and the Greens at 1. The CBC’s poll tracker (here) indicates that the Liberals could win 196 seats for a 25 seat majority with the Conservatives at the same 121 seats and the BQ also at 20, but the NDP (5) fares worse and the Greens still only get 1. In both attempts, the NDP is at risk of losing official party status and the funding that goes with that. 

Contrasting the Leaders

Canadians have strikingly different views of the two main leaders (chart 10). They have more confidence in the Liberals to manage the US relationship and to manage the economy, are divided on who would be best for the cost of living and national unity, and pivot to the Conservatives to cut taxes and fix immigration policy that has frankly been bungled for years.

Costed Platforms to Arrive this Week

Neither of the two main contending parties have released full platforms up to the time of writing. I will, however, use aggregator sites like this one and this one combined with other sources to offer a round-up of the promises they’ve made in a moment. Not surprisingly, they sound rather expensive and with no clear funding plans to date.

As the William Lyon Mackenzie King—the longest serving Canadian PM in history—once famously put it, “The promises of yesterday are the taxes of today.”

The Liberals have pledged to release their fully costed platform this weekend. The Conservatives pledged to release their platform in the coming days but it’s unclear whether it will be fully costed on arrival.

The Parliamentary Budget Officer (PBO) will have to move quickly to cost their platforms before the election as mandated. The PBO has issued their baseline budgetary balance projections (here) and they are shown in chart 11. The PBO’s baseline deficit forecast includes the recent March 2025 Economic and Fiscal Outlook and more recent commitments by the government and indicates persistent but dwindling deficits. They think the baseline deficit before adding campaign promises gradually narrows but that is based on stale forecasts developed on March 5^th before trade tensions super-escalated (here). 

Unfortunately, the PBO’s underling macro projections are stale. Our house fiscal deficit projection is also shown in chart 11 and I think there is strong risk of even bigger deficits but obviously contingent upon how badly the economy performs and how big the promises become! We’ll reassess once we see full platforms and then the election results. Chart 12 compares our fresh forecasts to the PBO’s that were issued on March 5^th before much of the tariff escalation hit (here).

Whichever party’s costed platforms add more to the cumulative deficits may garner significant coverage and may be influential in the dying days of the campaign. There are attempts at costing platforms, such as here, but they’re incomplete.

In my opinion, much of the Liberals’ overall set of promises project continuity from the former government of PM Justin Trudeau. Their policies lean heavily upon a distributive agenda that maintains relatively high taxes on most earners with limited engagement with the resource sector’s potential. The Liberals would advance a carbon border tariff that could endanger its stated effort to seek a renewed CUSMA agreement.

The current iteration of the Conservative Party is a working class, populist version of conservatism. You won’t hear talk of corporate tax reductions versus tax cuts for lower income earners and more favourable policies for small businesses and trades while presenting more favourable policies for the resources sector.

Clearly there are trade-offs in the policy perspectives both main parties are offering. I’ve tried to rattle them off while emphasizing contrasts by subject matter below. This is done on a best efforts basis since ideally we would have had full platforms by this point!!

Climate, Resources and Investment

• Liberals would keep the carbon tax on industrial emitters and tighten the pricing system, Conservatives would eliminate it. Both have said the consumer portion of the carbon tax is gone. This is a divisive issue in Canada (chart 13).

• Liberals would introduce climate incentives including zero-emissions subsidies.
• Liberals would favour higher oil production to reduce US imports.
• Liberals would allow pipelines but give Quebec a full veto on ones that cross its territory which is key in that it deflects responsibility. The Liberals also pledge to require support of Indigenous people, with PM Carney saying “This is Canada; that’s how Canada works.”
• Conservatives support an east-west pipeline—and so do many Canadians (chart 14)—but haven’t mentioned a Quebec veto or one for indigenous people. 

• Either approach toward veto powers risks division within Canada and perhaps a constitutional crisis. The path ahead for pipelines under either party is highly uncertain.
• Conservatives would green-light all federal permits for the Ring of Fire within six months to mine multiple metals.
• The Liberals would build an East-West electricity grid with ‘clean’ electricity.
• Liberals would create a ‘First Mile Fund’ to build transportation networks between resource extraction sites and transportation networks.
• Liberals would fast track approvals for large-scale, national-interest infrastructure projects.
• Conservatives would create a single office for all regulatory approvals across levels of government with one application and one environmental review and limit processing time to one year.
• Conservatives would create ‘shovel ready” zones for LNG in Quebec.
• Conservatives would repeal the Impact Assessment Act (C-69) that evaluates environmental and social impacts of projects. The Conservatives call this the “no new pipelines law.”
• Conservatives would create a national energy corridor that would fast-track approvals for projects.
• Liberals and the provinces have signed agreement to develop a national energy corridor.
• Liberals would phase out fossil fuels in government buildings by 2030.
• Conservatives would look into exporting oil from the Port of Churchill, Manitoba.

Tariffs & Trade

• Liberals would have a carbon border tariff on imports from countries without comparable carbon pricing, like the US. This risks escalation of trade tensions.
• Liberals would renegotiate a trade agreement with the US immediately after the election.
• Conservatives would seek a renegotiation of the CUSMA trade agreement “on day one” and would propose pausing tariffs during negotiations.
• Liberals have said supply management is “off the table in any negotiations.”
• Liberals would seek to create an “All-in-Canada’ supply chain for auto parts.
• Conservatives would not remove counter-tariffs until the US removes all of theirs.
• Conservatives would put most of the tariff revenue toward tax cuts and some for workers hit hardest.
• Conservatives would remove GST off Canadian-made cars as long as US tariffs remain.

Taxes

• Neither party has said anything about corporate taxes despite the loss of Canada’s relative corporate tax advantage (chart 15).

• Liberals would cut the tax rate for the lowest income tax bracket by 1%.
• Conservatives would cut the lowest income tax bracket rate by 2.25% to 12.75%.
• Liberals would increase the Guaranteed Income Supplement by 5% for a year.
• Conservatives would defer capital gains if the proceeds are invested in Canada from July 1^st 2025 to December 31^st 2026.
• Conservatives would allow working seniors earning less than $42k/year to pay no taxes on earnings up to $34k.
• Conservatives would allow travelling trades workers to write off the full cost of food, transportation and accommodation.
• Liberals would expand Labour Mobility Tax Deduction to allow more deductions.
• Liberals would allow businesses to defer income tax and GST/HST due to the trade war.
• Liberals and Conservatives would cancel the capital gains tax increase.
• Conservatives would cut the federal sales tax on Canadian-made vehicles for as long as tariffs exist.
• Conservatives would cap deductions for luxury corporate jets to the equivalent of a commercial flight.
• Conservatives would eliminate the automatic annual escalator tax on wine, beer & spirits (ie: annual tax increases).

Job Markets

• Liberals would ease access to employment insurance by raising regional unemployment rate percentages and waiving the one-week waiting period for EI for job losses due to the trade war.
• The Conservatives “more boots, less suits” plan would target 350k skilled trades workers.

Housing

• Liberals would eliminate GST on all homes up to $1 million for first-time home buyers and significantly renovated homes.
• Conservatives would eliminate the GST on new homes sold under $1.3 million at a cost of $4–5B.
• Liberals would create a standalone developer of affordable prefab housing on public lands with $25B in debt financing and $1B in equity financing.
• Conservatives would tie federal funding to cities to housing starts with the expectation they would rise 15% per year with bonuses to municipalities for exceeding.
• Conservatives would incentivize cutting development charges by matching the amount they cut to a maximum of $25k per home.
• Liberals would reduce costs by halving municipal development charges for five years.
• Conservatives would sell 15% of federal owned buildings to use as affordable housing.
• The Liberals’ housing plan is the same as former PM Trudeau’s, including a pledge to build 500k homes per year over the next ten years. Obvious challenges to roughly doubling norms for annual homebuilding include where to get the labour and resources, plus whether homebuyers would want the type of product being offered.

Financial Sector

• Conservative Leader Poilievre’s stance toward the Bank of Canada is presently unclear.
• The Conservatives have been frequent critics of banks.
• Liberals would reduce the minimum amount that has to be withdrawn from a RRIF by 25% for one year.
• Conservatives would raise the TFSA contribution limit by $5k/year if invested in Canada.
• Conservatives would allow seniors to contribute to RRSPs for two extra years to 73.
• Conservatives would redirect CRA resources toward targeting offshore tax havens and create a “name and shame” publication of corporations evading taxes while expanding offshore tax informant program.
• Conservatives have pledged to fine banks and telcos $5 million per violation if wilfully neglectful to stop fraudsters on older people. Proving neglect would be a challenge, but the tallies could become very high.
• Conservatives pledge to require banks to recognize apprenticeship and skilled trades programs for RESPs.

Defence

• Liberals would increase defence spending to 2% of GDP by 2030.
• Conservatives would increase defence spending to 2% of GDP but a timeline seems to be unclear.
• Liberals would invest $420 million to protect Arctic sovereignty.
• Conservatives would acquire two more polar icebreakers and build at least one base in the Arctic within two years.

Foreign Aid

• Conservatives would cut and divert funding to the military.
• The Liberals have not been clear on their foreign aid plans.

Government Spending

• Liberals would cut public spending, balance an operating budget within three years, but run a small deficit on capital spending.
• Liberals stand by plans to continue with rolling out dental care, pharmacare and childcare programs as laid out in prior budgets.
• Liberals say they will slow spending growth through technology and attrition.
• The Conservatives have said they would maintain existing federal dental, child and pharma care programs but have not specified if they would be committed to future planned increases.
• Conservatives pledge dollar for dollar cuts in spending for every new dollar of spending.
• Conservatives would cut subsidies to businesses and foreign aid and defund the CBC but keep Radio-Canada.
• Liberals would increase CBC/Radio-Canada annual funding by an initial $150 million.
• Both parties emphasize reducing civil servants through attrition over firings.
• Conservatives pledge to cut consultants.

Immigration

• Liberals would maintain existing caps on immigration.
• Conservatives would restrict temporary foreign workers to “rare circumstances” when there are not enough Canadians to meet requirements.
• Conservatives would reduce non permanent residents (“temps”) in Quebec and give the province more powers to choose them.
• Conservatives would tie population growth rate to below the number of new homes built and infrastructure adequacy. How is unclear.

Jobs

• Liberals would provide an apprenticeship grant of up to $8k and other enhancements.
• Conservatives will allow union training centres & colleges to pre-register apprentices for EI, with the aim of creating a "special case of rapid EI payout for skilled tradespeople".
• Conservatives pledge to create a "Keeping Canadians Working Fund" for temporary low-interest loan & short-term credit lines up to $3B for affected businesses.

Foreign Ownership

• The Conservatives are thought to be more likely to address foreign ownership restrictions including in areas like telcos. This could raise P/Es by putting companies potentially into play.

Interprovincial barriers

• Liberals would eliminate federal barriers to interprovincial trade by Canada Day this year.
• Conservatives would aim to unite Premiers within 30 days to simplify the Canada Free Trade Agreement and enable professionals, including immigrant doctors and nurses, to work anywhere in Canada, reducing health care wait times. Plus, work with provinces to “harmonize health and safety regulations” so tradespeople can work anywhere in Canada without having to repeat training. Will offer Free Trade Bonus as an incentive.