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Front GoCs Ending The Week With Rare Underperformance

CANADA
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  • 2Y GoC yields are pushing higher and now sit +2.8bps on the day vs +0.6bps for Tsys.
  • At 4.239%, 2Y yields are through pre CAD CPI levels and at levels last seen shortly before dovish spillover from US CPI on May 15.
  • It sees the Can-US yield differential lift a little further off the week’s lows but it’s still depressed at -70bps as Tuesday’s soft core CPI trends still weigh on BoC rate expectations.
  • For reference, it ended last week at -59.5bps having earlier in the week closed at a recent high of -55bps, whilst its recent multi-year low was a short-lived -84bps on Apr 25.
  • Domestic macro factors have been limited today as retail sales was met with relatively little reaction after soft details for the full March release were offset by a strong nominal April flash.
  • BoC-dated OIS continues to hold around 16bp of cuts for the Jun 5 BoC decision. US spillover aside, the next main local driver is likely Q1 GDP on May 31.
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  • 2Y GoC yields are pushing higher and now sit +2.8bps on the day vs +0.6bps for Tsys.
  • At 4.239%, 2Y yields are through pre CAD CPI levels and at levels last seen shortly before dovish spillover from US CPI on May 15.
  • It sees the Can-US yield differential lift a little further off the week’s lows but it’s still depressed at -70bps as Tuesday’s soft core CPI trends still weigh on BoC rate expectations.
  • For reference, it ended last week at -59.5bps having earlier in the week closed at a recent high of -55bps, whilst its recent multi-year low was a short-lived -84bps on Apr 25.
  • Domestic macro factors have been limited today as retail sales was met with relatively little reaction after soft details for the full March release were offset by a strong nominal April flash.
  • BoC-dated OIS continues to hold around 16bp of cuts for the Jun 5 BoC decision. US spillover aside, the next main local driver is likely Q1 GDP on May 31.