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GoCs Trail UST Rally

CANADA
  • *GoCs trail USTs in the short end to belly, following early budget talks yesterday.
  • * 2Y GoCs are -1.6bps vs the -3.3bps for 2Y USTs, whilst both GoC and UST 10YY are down circa 2.5bps.
  • * The Liberal minority government might need to offer further support for health care to secure support from the NDP.
  • * Provincial and territorial premiers have long called for an increase to the Canada Health Transfer (worth C$43.1B or 1.7% GDP this year) and will meet virtually on Friday to discuss further.
  • * It remains to be seen whether additional CHT funding will be secured on top of the already planned increase but it could nevertheless prove contentious.

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