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Sizeable Front Rate Increases On Macklem/Jobs

CANADA
  • BA yields have pulled back from post-US & Canadian job report highs but still see solid increases of 3.5-5.5bps on the day through to mid-2024.
  • It sees front rates currently 18bps higher than before Macklem’s hawkish remarks yesterday but also with solid gains further out with the Dec’23 +14bps.
  • The jump higher has pushed front rates further through prior terminal highs, nearing an implied peak policy rate of 4.25% in the Mar'23 from 3.25% currently, with BAH3/BAZ3 inversion limited to 20bps of cuts.
  • It’s a light Canadian docket next week where US CPI headlines. Key local releases are the week after with the BoC’s surveys on Oct 17 and CPI on Oct 19 before the BoC decision follows on Oct 26.

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