According to Avery Shenfeld, the federal fiscal update on Monday will likely reveal an overshoot of this year's deficit target, and while that will garner headlines and political chatter, it's not CIBC's focus. He said an extra $10 billion, for example, would only add about 0.3% to the deficit/GDP ratio, which will be cushioned by an upward revision to the level of GDP this year due to prior year revisions. That, he added, would still leave Canada's combined federal/provincial deficit miles below the US and most other major economies. Shenfeld noted the economic lift from this year's spending and revenue path has already been largely captured in the existing path for GDP, so it doesn't mean much for Bank of Canada decisions ahead, even if it also sets a higher base for next year's deficit.

CIBC's eyes will instead be on any announcements of additional fiscal stimulus beyond the modest one-time lifts from previously announced $250 cheques and a short-lived partial GST holiday. Shenfeld said: "If Ottawa abandons its fiscal handcuffs and tacks on timely (i.e. funds actually doled out soon, not over a decade), material (more than a couple of decimal places of GDP) and lasting net-stimulus (i.e. not shuffling money from one envelope to another) we and the market might have to recalibrate expectations for further Bank of Canada rate cuts."

Shenfeld added: "We can't be too sure if that's actually coming in this statement, or merely under consideration for next year's budget. Perhaps that same uncertainty was why Governor Macklem was so cagy about where he's going from here. That said, a front-end sell-off on reduced rate cut expectations due to fiscal measures could be shortlived, if we find ourselves facing a material shock from US tariffs in early 2025."

On the data front, CPI inflation for November on Tuesday could get a marginal lift from 'Swifties' paying temporarily higher prices for hotels, air fares and tickets, while advance readings on retail sales, due out next Friday, suggest another healthy monthly gain.

(Also on the CIBC calendar for release next week is the duo of November Housing Starts and November Existing Home Sales data on Monday; October Int' Securirities Transactions on Tuesday; and October Payrolls data on Thursday. Also of note, Bank of Canada Governor Tiff Macklem speaks before the Greater Vancouver Board of Trade on Tuesday 3:35pm (ET).)