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Govt Bonds Sell-Off On Further Strength Of Domestic Indicators

CANADA
  • Canadian govt bonds are continuing Friday’s sell-off, with the belly modestly underperforming.
  • Shorter yields have moved higher throughout the session, with the 2Y +3.3bps to extend new recent highs at 1.191% whilst the 5Y is up +3.7bps at 1.601% as it moves above the pre-Omicron high of 1.578%.
  • The move has been supported by further inflation pressures evidenced in a strong rise in manufacturing sales (admittedly as expected and back in Nov) plus strong house price growth in Dec of 2.5% M/M for a record 26.6% Y/Y.
  • *The upcoming BoC business and consumer surveys for Q4 could also have an impact.

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