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Rate Path Resilience

CANADA
  • BAX futures have been fairly resilient to negative Russia-Ukraine headlines today, unwinding most of the earlier retreat on the cyber-attack on Ukraine.
  • Pricing in an additional 3.5-4bp of hikes in Dec whites and reds on the day, they roughly imply 7 hikes in 2022 before the pace slows materially with 41bp through 2023 (within the 40-45bp range since last month’s BOC/FOMC decisions).
  • Two of the more recent view changes have been GS & JPM upping calls to 6 hikes in 2022 followed by a further 4 in 2023 to leave the policy rate at 2.75%, in both cases with balance sheet runoff starting in April.

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