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Canada Unwinds Yesterday's Rally

  • BAX futures implied yields have increased further this afternoon, but seemingly mainly on the continued re-pricing in of US hikes during Powell’s testimony.
  • The initial reaction to the BOC hiking 25bps with a modestly hawkish statement saw yields briefly rise before the move was fully reversed, potentially on the lack of new information on balance sheet runoff.
  • Late dated whites and front reds have seen the largest move, up 16-18bps taking them back to levels before yesterday’s STIR rally.
  • Local focus is heavily on Gov Macklem Economic Progress Report at 1130ET followed by media questions 1245ET, and then Macklem & Rogers before the House between 1530-1730ET.

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