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GS Add To Some Growing Hawkish BoC Calls

CANADA
  • Goldman late Friday recommended paying Sept BoC OIS, with entry at 4.63%, target at 4.90% and stop at 4.40%.
  • They see markets as underpricing the risk of a resumption in BoC policy tightening, with inflation details suggesting upside risk (from rents and core goods), a housing market that appears to be bottoming and the labor market showing continued resilience.
  • It follows Scotia on Thu also seeing a final 25bp hike to 4.75% at the June 7 decision, in a move they see as insurance against inflation with their model not indicating a need for further hikes.
  • Most analysts see rates on hold at 4.5% (per Friday’s Bloomberg survey) although Citi were a prior longer standing hawkish holdout also calling for a 25bp hike in June.

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