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BAX Yields Higher With Mild Risk On

CANADA
  • BAX yields have slowly climbed to the top end of yesterday’s range with 2-3bp gains across most of the curve, continuing the theme in GoCs of modestly underperforming the US.
  • Few obvious drivers with the move instead likely down to firmer risk sentiment with S&P e-minis moving higher and USDCAD also dipping to session lows.
  • The curve is little changed on the day ahead of tomorrow’s CPI, with BAX yields peaking at 4% (crudely implying a policy rate ~3.5%) before 50bps of inversion through 2023, with much of the curve unchanged from after last week’s front-loaded 100bp hike from the BoC.

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