08:21 AM EDT, 04/29/2025 (MT Newswires) -- Liberals win a narrow race in Monday's parliamentary election but need to team up for a majority in Canada, said Rosenberg Research.

The fact that the Liberal Party couldn't garner a majority with its 168 seats, falling short of the 172 needed to govern unilaterally -- the Conservatives with 144 -- means that the Mark Carney-led Liberals will need to cobble support from either the NDP or the Bloc Quebecois -- who garnered 23 seats -- and both fringe parties are major fiscal expansionist entities, sttaed Rosenberg Research.

The Liberals had already run its campaigns on larger deficits and more spending growth -- prefabricated housing, green energy, and public infrastructure -- so the fact that it will have to team up with a partner that is even more ambitious on the fiscal front isn't the greatest news for the Government of Canada (GoC) bond market, noted Rosenberg.

However, it's positive at the margin for the Canadian dollar (CAD or loonie) since it also means less pressure on the Bank of Canada to end up easing monetary policy as much as would have occurred had the Conservatives emerged victorious, added Rosenberg.

So far, the loonie has refused to rally on the election results, perhaps because of the uncertainty a minority government typically engenders.

The big challenge for Prime Minister Carney will be his need to confront a looming Canadian recession that will come from three sources: (i) the hit from the Trump-induced trade war and all the direct and indirect negative effects for a country that ships 20% of its gross domestic product to the United States, (ii) the lingering uncertainty, which is bound to cause a freeze in business capital spending and hiring plans, and (iii) the mounting recessionary pressures in the U.S., which Canada will be importing to compound the economic downturn at home.