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CANADA: Yields Extend Tariff-Delay Climb, Intermeeting Cut Odds Disappear

CANADA
CanadaBulletMarketsFixed Income BulletsForeign Exchange BulletsNorth America
  • US tariffs on Canada were postponed in the hours before they were due to become effective yesterday, with a formal delay to Mar 4.
  • PM Trudeau announced Canada is implementing its C$1.3bn border plan and that 10,000 frontline personnel are and will be working on protecting the border. Amongst other appeasing measures announced, it will appoint a fentanyl czar and will list cartels as terrorists.
  • USDCAD saw a low of 1.4387 late yesterday (currently 1.4436) to completely reverse yesterday’s lurch to 1.4793. That low probed support at 1.4398 (20-day EMA) after which lies 1.4290 (50-day EMA).
  • BoC-dated OIS points to 16-17bp of cuts for the Mar 12 meeting in early trade vs the 25-30bps seen for much of yesterday.
  • Intermeeting cut plays have disappeared, with no cuts priced in for 1m OIS vs 2bps seen after the Mexico delay and more than 4bp prior to that.
  • CORRA futures implied yields lead climbs in G10 on the day after yesterday’s slide, with yields up to 13bp higher in early trading.
  • The Mar’26 yield has climbed 24bp from yesterday’s low seen pre-Mexico delay, leaving a terminal yield of 2.44% (BoC neutral seen between 2.25-3.25%, overnight rate currently 3.00%). It’s still almost 30bps below levels prior to Trump’s inauguration.
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  • US tariffs on Canada were postponed in the hours before they were due to become effective yesterday, with a formal delay to Mar 4.
  • PM Trudeau announced Canada is implementing its C$1.3bn border plan and that 10,000 frontline personnel are and will be working on protecting the border. Amongst other appeasing measures announced, it will appoint a fentanyl czar and will list cartels as terrorists.
  • USDCAD saw a low of 1.4387 late yesterday (currently 1.4436) to completely reverse yesterday’s lurch to 1.4793. That low probed support at 1.4398 (20-day EMA) after which lies 1.4290 (50-day EMA).
  • BoC-dated OIS points to 16-17bp of cuts for the Mar 12 meeting in early trade vs the 25-30bps seen for much of yesterday.
  • Intermeeting cut plays have disappeared, with no cuts priced in for 1m OIS vs 2bps seen after the Mexico delay and more than 4bp prior to that.
  • CORRA futures implied yields lead climbs in G10 on the day after yesterday’s slide, with yields up to 13bp higher in early trading.
  • The Mar’26 yield has climbed 24bp from yesterday’s low seen pre-Mexico delay, leaving a terminal yield of 2.44% (BoC neutral seen between 2.25-3.25%, overnight rate currently 3.00%). It’s still almost 30bps below levels prior to Trump’s inauguration.
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