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GoC Yields Touch Fresh Cycle Highs

CANADA
  • GoC yields are another 5-7bps higher today as all major tenors move further above 3% for new cycle highs.
  • The continued underperformance to Tsys (up circa 3bps) further boosts already high Can-US yield differentials, with the 34bp for the 2Y the highest since Dec’21 and the 23.5bp for the 10Y the highest since late 2011.
  • Some of this latest underperformance looks Treasury-specific though, with core Europe seeing similar moves to Canada ahead of tomorrow's ECB decision.
  • The widening yield differentials are however at risk of narrowing if recent BoC hawkishness is even marginally pulled back by Gov Macklem speaking tomorrow following the BoC's Financial System Review.

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