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Desjardins: Bond Bulls Have To Wait A Bit Longer To Celebrate

  • Desjardins note that “the simple fact that headline inflation is back within the target range means the risk of further rate hikes is significantly lower than market-implied pricing."
  • “As a result, we see some room for 2-year GoCs to rally as traders pare back bets on another rate increase before the end of the year.”
  • “But elevated measures of underlying inflation increase the odds that the policy rate won’t be coming down anytime soon as central bankers remain concerned about a second wave of excess inflation. That leaves limited room for rate cuts to be priced in until some of these measures of underlying price growth settle down. As a result, bond bulls will have to wait a bit longer to celebrate.”

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