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Closing Another Week With Significant Dis-Inversion

CANADA
  • Canadian FI has pulled back off post-US PCE lows but is still notably cheaper on the day, be it GoC yields 9-10bps higher for 2-5Y tenors or BAX implied yields rising 15bps in 2024 contracts.
  • The further significant higher for longer push in BAX (Jun’23 +4bp, Dec’23 +10bp and Jun’24 +15bp) sees BAH3/Z4 back in positive territory at 0.06 for the first time since May (when peak yields were closer to 3.5%) and BAZ3/M4 now -0.61 with the Jun’24 yield 120bps higher than after last month’s BoC decision.
  • Next week, GDP for Q4/Jan flash provides one of the last main data steers locally before Mar 8 BoC, plus also current account and the bulk of Q4 bank earnings, although unlikely to change expectations of no change.

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