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TD BoC View Change: Looking For 75bp Hike Next Week

  • Today’s CPI data tipped the scale to a 75bp hike next week as there was no evidence that inflation has turned.
  • Firming core measures were probably the most important take-away and whilst increases reflect upward revisions to CPI-common, CPI-trim and CPI-median were also unchanged from August with no comfort taken from an average 4.95% Y/Y.
  • FX: Strongly fade dips into 1.36/37 whilst looking to top 1.40 again in coming weeks as function of awful outlook for household debt servicing into year-end.
  • Rates: 2s5s should have flattened but didn’t and looked about 4bp too steep. Reiterate flattener views 6m6m-1y1y, 1y1y-1y5y and 10s30s but don’t see risk-reward skewed either way in next couple weeks for long Can-US theme.

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