J.P.Morgan: Medium-Term Outperformance Should Resume As BoC Set To Taper

J.P.Morgan have noted that "this week's long-awaited BoC MPR meeting intersects with an increasingly-distressing local COVID-19 wave. But we believe the mix of the BoC's prior taper guidance, concern over the size of its footprint in the bond market, and its likely view that the impact from the current wave is temporary, will ultimately outweigh its COVID-19 concerns and prompt the start of tapering. It will be a close call, which is reflected in a pullback in BoC pricing over the last month - but this translates into a better upside skew to CAD from tomorrow's event, and could therefore mark an inflection point and resumption of earlier outperformance given a still-solid medium-term outlook."