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GoCs Modestly Underperform Ahead Of Data

CANADA
  • GoCs see growing but still modest underperformance to Treasuries, with 2YY -2.5bps vs -4.5bps and 10YY -4bps vs -5.5bps.
  • It only scratches at Can-US yield differentials of -51bp and -68bps for 2Y and 10Y respectively, the 2Y struggling to narrow (in absolute terms) beyond levels seen after the BoC’s Oct stepdown to a 50bp hike.
  • Potentially shaped by data ahead, with US PPI and Empire likely in the driving seat but also Canadian mfg/wholesale sales and existing home sales, the latter expected to largely pause after a cumulative 36% decline over seven months.

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