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BAX Rate Path Lurches Higher With US CPI & Can Jobs Hit

CANADA
  • The BAX rate path has shifted sharply higher today, led by the Mar’23 up 22bps for a huge 63bp increase since last after Wednesday’s BoC decision and on its way for crudely implying a terminal overnight rate close to 3.75%.
  • It’s been supported by both the US CPI beat and a strong Canadian employment report, with accelerating wage growth getting most attention in the latter.
  • It has prompted some analysts to revise their BoC rate calls higher, most notably GS with a 75bp hike in July and a 25bp higher terminal rate of 3.5% in Dec’22, but also with CIBC now seeing a terminal rate of 2.75% from 2.5%.

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  • The BAX rate path has shifted sharply higher today, led by the Mar’23 up 22bps for a huge 63bp increase since last after Wednesday’s BoC decision and on its way for crudely implying a terminal overnight rate close to 3.75%.
  • It’s been supported by both the US CPI beat and a strong Canadian employment report, with accelerating wage growth getting most attention in the latter.
  • It has prompted some analysts to revise their BoC rate calls higher, most notably GS with a 75bp hike in July and a 25bp higher terminal rate of 3.5% in Dec’22, but also with CIBC now seeing a terminal rate of 2.75% from 2.5%.