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BAX Rate Path Steeper Despite GDP Miss

CANADA
  • BAX futures implied yields pulled back from highs in early trading after GDP disappointed but are still up solidly on the day (led by Dec’22 and Mar’23 +7bps) for a second day of gains after sliding heavily last week.
  • A GDP observation of note comes from National Bank, pointing to booming growth within interest-sensitive sectors, in particular real residential investment (18%) and durables goods consumption (11%).
  • Coming ahead of tomorrow’s BoC decision, the BAX curve remains very steep, with BAX yields rising to 3.215% in the Dec’22 before peaking at 3.330% in the Jun’23 for barely 10bps of hikes over 1H23.

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