07:41 AM EDT, 07/08/2024 (MT Newswires) -- BMO Economics noted equity markets rose modestly last week amid some softer economic data and shortened holiday trading. The TSX added 0.8%, with materials leading. GoC yields were little changed on the week, with the 2-year down 6 bps and the 10-year flat. That came alongside some soft U.S. economic data and a weak Canadian jobs report for June.

In Canada, BMO noted, employment fell 1.4k in the month, leaving the 6-month average gain at 32k, but still up a "solid" 1.7% from a year ago. However, the bank said, there's clearly slack building in the job market, in part because of torrid labour supply growth (another +40k in June and +2.8% y/y). As a result, the jobless rate continues to rise, up two-ticks in June to 6.4%, and now 0.7 ppts since January.

At the same time, BMO said, the housing market has completely ignored the first Bank of Canada rate cut of this cycle, "a surprise to only those in the real estate business". BMO added: "Sales in the major cities were down in June, while inventory continues build and is acting like a wet blanket on prices."

According to BMO, this all left markets to "ratchet up" the odds of near-term rate cuts "somewhat", with the BoC now priced with better than 50-50 odds of a July cut. BMO said: "That's certainly very possible, although we believe there are still some hurdles in the way in the form of the upcoming CPI report and Business Outlook Survey."

Later this week, BMO noted, it's very quiet on the economic data front. There are no major data releases on deck today, and we'll get the full June housing market figures on Friday, which will show continued softness in sales and prices.