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GoC Underperformance Post Data Divergence Continues

CANADA
  • Strong CAD housing data and the weak US Empire Mfg continue to set the tone for decent GoC underperformance.
  • Yields sit 4.5-7bps higher across the curve, with largest underperformance at the front end with 2Y Tsy yields +1bp.
  • Today’s BoC Financial System Review provides marginal further cheapening impetus. It showed confidence at the highest since 2018, caveated heavily by the fact it’s taken between Feb 21 and Mar 10 and so missed US/Switz banking turmoil but with a subset saying their views haven’t materially changed since then.
  • Focus is likely on tomorrow’s CPI print, with consensus for core CPI to ease 0.2pps to an average 4.2% Y/Y.

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