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MNI: FED'S POWELL STILL SEES POSSIBLE PATH TO SOFT LANDING

MNI: POWELL: FED PREPARED TO TIGHTEN FURTHER IF APPROPRIATE

FED'S GOOLSBEE: 'YOU CAN'T BACK OUT NOW' ON INFLATION FIGHT

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Sizeable Widening In Can-US 2YY Differential Ahead Of CAD CPI

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  • The sharp rally in Treasuries after the 20Y auction traded through by 1bp has done relatively little to close the day’s large widening in CAN-US yield differentials ahead of tomorrow’s CAD CPI.
  • GoCs have only seen ~1bp of underperformance since the auction after sizeable outperformance ahead of it amidst a light local docket.
  • GoC outperformance is clearest at the front end, with 2Y GoCs 4.7bp richer vs 2Y Tsys 1.7bp cheaper, pushing the 2Y differential to -48.3bp for what would currently be the lowest close since Nov 10 (the final close before softer US CPI on Nov 14 with Remembrance Day landing in between).
  • If it gets much beyond -50bps it will see levels last seen in March.

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  • The sharp rally in Treasuries after the 20Y auction traded through by 1bp has done relatively little to close the day’s large widening in CAN-US yield differentials ahead of tomorrow’s CAD CPI.
  • GoCs have only seen ~1bp of underperformance since the auction after sizeable outperformance ahead of it amidst a light local docket.
  • GoC outperformance is clearest at the front end, with 2Y GoCs 4.7bp richer vs 2Y Tsys 1.7bp cheaper, pushing the 2Y differential to -48.3bp for what would currently be the lowest close since Nov 10 (the final close before softer US CPI on Nov 14 with Remembrance Day landing in between).
  • If it gets much beyond -50bps it will see levels last seen in March.