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Govt Bonds Hold Onto Intraday Flattening

CANADA
  • A pause in risk off sentiment this afternoon has seen GoC yields edge higher, but across the curve and thus maintaining most of the 5bp intraday flattening instead of reversing it.
  • This keeps 2s10s at 40bps, off Monday lows of 37bps (the flattest since Nov’20), with the front end elevated by aggressive rate path expectations and potentially requiring compression in long end yields to see a further flattening.
  • The 2YY of 1.505% is down from yesterday’s sustained highs of 1.55% but little changed from the shakeout from last week’s US CPI despite growing Russia-Ukraine uncertainty.

2Y (green), 10Y (yellow) and 2s10s spread (white)Source: Bloomberg

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