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CAN-US 2Y Yield Differential Widens Again Ahead Of Important Week

CANADA
  • GoCs have maintained the front-end outperformance to Tsys seen since early in the session, with 2YY +2bps vs +6bps for Tsys.
  • The CAN-US 2Y differential has widened again to -44bps having closed the past two sessions at -40bps for the tightest since Oct 25.
  • The move started early on but was further helped by US housing starts/building permits beating and CAD IPPI inflation missing consensus.
  • Today’s securities transactions data showed investors pulled a record C$41.4B out of Canadian securities in Q3, of which C$17.5B was attributable to September (when bond retirements of C$20.4B were the highest since 2018).
  • Next week is important for CAD drivers, with CPI and retail sales headlining data, along with the government’s Fall Economic Statement and Macklem also speaking.

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