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Front Bax Yields Firm With BoC, Less So Further Out

CANADA
  • The BoC hiked 75bps to 3.25% as widely expected, whilst kept the need to hike further with the risk of elevated inflation becoming entrenched and the economy continuing to operate in excess demand.
  • BAX front yields have seen a solid increase on the back of it, with BAZ2 +7bps on the day having pulled back from fleetingly touching a new high for the cycle.
  • The whole curve has shifted up but moves are kept to +2-3bps through 2023 with little new in the statement to shape longer term rate expectations. Tomorrow’s Economic Progress Report could be more impactful here.

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