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BAX Curve Holding Onto Larger Hikes

CANADA
  • BAX futures underperform Eurodollars for the second day running (although more modestly today) as they continue to hold onto more of the recent rise in implied yields both before and after Powell on Monday.
  • Previous signs of an economy running hot with the unemployment rate almost back to lows and inflation again above expectations has helped match a ramp higher in Fed hike expectations.
  • Whilst implying roughly similar peak rates to those seen in the US in the red pack, the BAX curve sees a more mellow inversion thereafter.
  • The next steer from the BoC could come from Dep Gov Kozicki on Fri, the only scheduled BoC communication between now and the meeting on April 13.

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