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Front End Outperformance Growing Despite Sizeable Cheapening

CANADA
  • 2Y GoC yields haven’t followed the latest push to new highs in Treasuries after already large increases for the session, currently +10bps vs +13bps for Tsys.
  • Potential spillover from US core PCE/ECI tomorrow aside, CAD GDP for Feb/Mar advance offers a look at latest growth with the BoC wanting to see some below trend growth to cut into excess demand.
  • The next BoC decision is still six weeks away though, with the market currently buying the conditional pause with rates seen on hold at 4.5% until close to a 25bp cut in December.

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