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CANADA: CAD Rates See Large Paring Of Gains On US-Mexico Tariff Delay

CANADA
CanadaBulletMarketsFixed Income BulletsForeign Exchange BulletsNorth America
  • CAD rates have seen a sizeable paring of earlier gains on Mexico President Sheinbaum saying the US has agreed to pause tariffs for one month (since confirmed by Trump).
  • There’s the clear assumption here that Canada will see a similar development (presumably helped by last week’s Reuters piece on the potential for a delay to Mar 1) but nothing concrete has come since Trump and Trudeau’s earlier call and with another call set for 1500ET today.
  • Dec’25 CORRA futures implied yields have lifted some 8bps intraday but are still 12bp lower on the day. They're back close to where they traded at the US crossover after thin overnight trade.
  • Terminal CORRA yields are seen at 2.27% (BoC neutral rate 2.25-3.25%), 45bp lower since Trump’s inauguration.
  • As for the very near-term, odds of an inter-meeting cut from the BoC have been trimmed from earlier levels, with one-month OIS showing almost 3bp of cuts vs between 4-5bp earlier. For the meeting itself on Mar 12, there are 27.5bp of cuts prices vs 19bp on Friday.
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  • CAD rates have seen a sizeable paring of earlier gains on Mexico President Sheinbaum saying the US has agreed to pause tariffs for one month (since confirmed by Trump).
  • There’s the clear assumption here that Canada will see a similar development (presumably helped by last week’s Reuters piece on the potential for a delay to Mar 1) but nothing concrete has come since Trump and Trudeau’s earlier call and with another call set for 1500ET today.
  • Dec’25 CORRA futures implied yields have lifted some 8bps intraday but are still 12bp lower on the day. They're back close to where they traded at the US crossover after thin overnight trade.
  • Terminal CORRA yields are seen at 2.27% (BoC neutral rate 2.25-3.25%), 45bp lower since Trump’s inauguration.
  • As for the very near-term, odds of an inter-meeting cut from the BoC have been trimmed from earlier levels, with one-month OIS showing almost 3bp of cuts vs between 4-5bp earlier. For the meeting itself on Mar 12, there are 27.5bp of cuts prices vs 19bp on Friday.
image