Markets are more gloomy about our economy than the Bank of Canada — who’s right?

As the Bank of Canada meets this week amid trade-war chaos, a big unanswered question will loom over the gathering: Who’s right about the nation’s economic prospects, gloomy traders or optimistic policy makers?

Markets are worried that Canada is deeply exposed to the U.S.-China trade spat. The Canadian yield curve is inverted, with three-month government debt yielding more than 10-year notes, suggesting fear the dispute will weigh on global growth. The rates market is pricing in 17 basis points of central bank easing through the next 12 months, according to trading of forward contracts.

But the Bank of Canada has been resolute. Governor Stephen Poloz said May 17 that there’s much evidence the economy is strong, calling signs to the contrary just a “detour” and saying interest rates will rise once the headwinds dissipate. The central bank will reveal its latest policy decision Wednesday morning.