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Bear Flattening But Off Cheaps

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Rate Path Trimmed But Remains Heavily Front-Loaded

CANADA
  • BAX futures have pulled back around a third of the day's increase but are still ~9 ticks higher across most of the curve except front whites.
  • This sees implied yields down significantly from Friday’s highs (BAZ2 -31bps, BAZ3 -38bps) but the curve remains more front-loaded than after the BoC’s Apr 13 first 50bp hike, quickly rising to a crudely implied overnight rate between 2.75-3% in the BAZ2.
  • The large CPI beat back on Apr 20 and the indication from Gov Macklem that another 50bp hike is being considered for Jun 1 should help maintain this front-loaded profile.
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  • BAX futures have pulled back around a third of the day's increase but are still ~9 ticks higher across most of the curve except front whites.
  • This sees implied yields down significantly from Friday’s highs (BAZ2 -31bps, BAZ3 -38bps) but the curve remains more front-loaded than after the BoC’s Apr 13 first 50bp hike, quickly rising to a crudely implied overnight rate between 2.75-3% in the BAZ2.
  • The large CPI beat back on Apr 20 and the indication from Gov Macklem that another 50bp hike is being considered for Jun 1 should help maintain this front-loaded profile.