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BoC Surveys Drive Further BAX Inversion

CANADA
  • The widespread increasing in inflation expectations across both businesses and consumers in the BoC’s Q2 surveys have boosted near-term hike expectations (BAZ2 now +3.5bps on the day) whilst maintaining an earlier softening through 2023.
  • Some firms expect inflation will only return to target with a recession, chiming with growing inversion through 2023, with BAZ2/BAZ3 -12bps on the day for -32bps overall.
  • These surveys tend to have a prolonged impact on markets, and the short-term hawkish implications could continue to support moves ahead, especially with the US back in tomorrow, prior to Friday’s labour reports and then the BoC decision next Wednesday.

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