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Breakevens Slide After 10Y TIPS Auction Tails

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Investors want Canada's government to curb sales of longer-term bonds as an improving economy reduces borrowing needs, according to a consultation released by the central bank on Tuesday.

"A majority of market participants indicated that in case of materially lower borrowing needs in 2022-23, the T-Bill sector should not be lowered materially below the current level and that the issuance of ultralong bonds and the 3-year sectors could be terminated," according to the documents.

"Some market participants stated that the net issuance in the net 30-year sector could also be increased somewhat in 2022-23 but not without putting further pressure on yields," and expanded treasury bill and two-year bond sales would be preferable. MNI reported earlier this year on the BOC pulling back its purchases at bill auctions as the government shifted to longer-term borrowing.