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Front-Loading Of Rate Path

CANADA
  • BAX futures are off earlier lows but continue to imply higher yields on the day, and with the largest move in Dec whites and implying in the region of 7 hikes in 2022.
  • Latest surveys continued to support a front-loaded path:
  • The Q1 business conditions survey saw 35.7% of businesses expecting to raise prices over the next three months (25.9% in Q4 survey) and 37.0% expecting labour shortages to be an obstacle over the next three months (32.7% in Q4).
  • Capex intentions for 2022 showed a planned 7.8% increase in nominal private investment this year but it still leaves investment below 2019 rates. CIBC notes it implies real non-residential private capex will be well below its pre-COVID trend line.

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