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Vol Buying Resumes


5Y Weekly Midcurve Calls


‌‌(U1)‌‌ Support Holds For Now


Expiries for Jul26 NY cut 1000ET (Source DTCC)


New York Fed Staff Nowcast

By Greg Quinn
     OTTAWA (MNI) - The Bank of Canada amplified its warnings about 
global trade conflicts for a second meeting without giving a direct 
signal about cutting its key interest rate, saying unexpected domestic 
growth is keeping the economy on track.
     The target rate on overnight loans remained 1.75% where it's been 
all year, in line every prediction used to compile the MNI economist 
median. The one-page statement from Ottawa largely kept a key phrase 
about the rate being appropriate while saying the escalating U.S.-China 
trade fight has pushed down prices for exported commodities and inverted 
Canada's bond yield curve. 
     "In sum, Canada's economy is operating close to potential and 
inflation is on target," at 2%, policy makers led by Governor Stephen 
Poloz wrote in the decision. "However, escalating trade conflicts and 
related uncertainty are taking a toll on the global and Canadian 
economies. In this context, the curent degree of monetary policy 
stimulus remains appropriate."
     Other language in the statement signaled that trade risks may 
dominate the next decision due Oct. 30, a few days after Canada 
is set to hold a federal election. Dropping a reference to closely 
tracking Canada's energy industry, the statement said "Governing Council 
will pay particular attention to global developments and their impact on 
the outlook for Canadian growth and inflation."
     Days after U.S. President Donald Trump moved ahead with fresh 
tariffs on China, the BOC said trade policies have weakened global 
commerce and investment and sapped global "momentum" by more than the 
central bank predicted in July.
     Canada's economy showed unexpected strength in second-quarter GDP 
growth and in the latest inflation report for July, the central bank 
said, adding some of that appears temporary. The GDP report last 
Friday showed growth at a 3.7% annualized pace, the fastest in two 
years. Inflation was 2% in July, matching the BOC's target. 
--MNI Ottawa Bureau, +1-613-314-9647,