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GoCs Initially Shrug Off Gravelle QT Comments

CANADA
  • Can-US yield differentials have seen a mild uplift after Gravelle’s QT comments but there’s not much in it: 2Y at -50bps, 5Y at -72bp and 10Y at -77bps.
  • The Bank still expects to continue QT until reaching settlement balances in the C$20-60bn balances.
  • However, rather than seeing this reached in late 2024 or early 2025, it now sees just “sometime in 2025”.
  • They continue to judge that the strain in money markets at the turn of the year came from expectations of aggressive cuts increasing demand for long-term government bonds rather than a sign of needing to reduce the pace of QT.

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