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Three Consecutive Cuts Priced To Year-End After Mixed Jobs Report

CANADA
  • Today’s mixed jobs report has done little to change market pricing for the near-term BoC rate path.
  • There is still a little more than a 25bp cut for September as part of a cumulative 75bp of cuts over the three meetings to year end (Sep, Oct, Dec), extending the two 25bp cuts seen in June and July.
  • Can-US yield differentials have since fallen further though, with the 2Y -2bps post-data for -3.3bp on the day at -72bps – that’s middling for levels since June but still depressed historically.
  • Jobs growth disappointed again (-3k vs cons +25k) and whilst there was an initially more than offsetting impact from strong full-time jobs growth and the unemployment rate surprisingly holding steady (6.4% vs cons 6.5%), the lack of feedthrough from strong population growth to the labour force suggests possible further upward u/e rate pressures ahead.

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