Based on analysts at TD Securities, the Canadian CPI knowledge would be the larger driver for charges because the collapse in danger belongings over the previous few weeks put a major bid into Canadian fastened earnings, with 10-year yields transferring nearly 20 bps decrease since Nov.
“eighth with an analogous rally in Dec. 2019 BAXs. Now that danger sentiment has stabilized considerably, an upside shock on CPI might set off a disproportionate sell-off in CAD charges, and we like promoting U9s and Z9s an outright foundation heading into the discharge.”
“Transferring out the curve, we keep a core quick Canada-long US view in 10s and 30s, and the risk-reward tradeoff across the knowledge reinforces that view. Lastly, trying on the curve our highest conviction right here is to personal lengthy bonds versus 10s heading into Dec. 1.”