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GoCs See New Cycle Low For 2s10s With Further Inflation Data Tomorrow

CANADA
  • GoCs see sizeable outperformance to Treasuries, especially at the long end, driving a widening in negative Can-US yield differentials with the 2Y at -54bp and 10Y at -67bp, reversing what had looked a narrowing shortly after open before St Louis Fed's Bullard stoked hiking expectations.
  • The combination maintains even more heavily inverted 2s10s in Canada to the US, at -82bp having earlier hit fresh post-1990 lows of -84bps.
  • It comes as Canadian rates markets remains heavily inverted after a peak in early 2023, with the BAX curve showing between two and three 25bp cuts to end-2023.
  • Following CAD CPI yesterday, industrial product and raw materials cost inflation is in focus locally tomorrow, with US existing home sales hitting later and expected to see a renewed decline after weak prior pending home sales.
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  • GoCs see sizeable outperformance to Treasuries, especially at the long end, driving a widening in negative Can-US yield differentials with the 2Y at -54bp and 10Y at -67bp, reversing what had looked a narrowing shortly after open before St Louis Fed's Bullard stoked hiking expectations.
  • The combination maintains even more heavily inverted 2s10s in Canada to the US, at -82bp having earlier hit fresh post-1990 lows of -84bps.
  • It comes as Canadian rates markets remains heavily inverted after a peak in early 2023, with the BAX curve showing between two and three 25bp cuts to end-2023.
  • Following CAD CPI yesterday, industrial product and raw materials cost inflation is in focus locally tomorrow, with US existing home sales hitting later and expected to see a renewed decline after weak prior pending home sales.