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CANADA: CAD Rates Swing On Latest Tariff Rhetoric

CANADA
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  • GoC yields have unsurprisingly reversed an earlier climb following White House Press Secretary Leavitt firmly pushing back on an earlier Reuters piece, with Leavitt saying 25% tariffs will be implemented from tomorrow as originally planned (vs Mar 1 per Reuters sources).
  • 2Y yields are back to 5.2bp lower on the day for a 24bp slide on the week.
  • It sees the Can-US 2Y yield differential 6.5bps lower on the day at -155bps. A pre-Reuters story low of -155.6bp easily marked fresh multi-decade lows, last seen in the late 1990s, before it increased to -148bp earlier today.
  • BoC-dated OIS meanwhile prices closer to 19bp of cuts for the March meeting, which feels a long six weeks away. It had been 10bp shortly after Wednesday’s BoC decision with the declines almost entirely tariff driven considering today’s monthly GDP data was mostly in line (albeit with perhaps the bounce in the Dec advance likely underwhelming earlier today). 
image
2y Can-US yield differential  Source: Bloomberg

 

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  • GoC yields have unsurprisingly reversed an earlier climb following White House Press Secretary Leavitt firmly pushing back on an earlier Reuters piece, with Leavitt saying 25% tariffs will be implemented from tomorrow as originally planned (vs Mar 1 per Reuters sources).
  • 2Y yields are back to 5.2bp lower on the day for a 24bp slide on the week.
  • It sees the Can-US 2Y yield differential 6.5bps lower on the day at -155bps. A pre-Reuters story low of -155.6bp easily marked fresh multi-decade lows, last seen in the late 1990s, before it increased to -148bp earlier today.
  • BoC-dated OIS meanwhile prices closer to 19bp of cuts for the March meeting, which feels a long six weeks away. It had been 10bp shortly after Wednesday’s BoC decision with the declines almost entirely tariff driven considering today’s monthly GDP data was mostly in line (albeit with perhaps the bounce in the Dec advance likely underwhelming earlier today). 
image
2y Can-US yield differential  Source: Bloomberg