The Bank of Canada remains hawkish (by modern standards), and the policy rate is marching higher. Unless there is a surprise slowdown in inflation (or activity), the policy rate is on track to hit 2.5-3%. As the figure above suggests, that might be enough to get the 5-year Government of Canada yield to break above its highs for the post-Financial Crisis period. The 5-year is already pricing in rate hikes, and so the more bond-bearish commentators might be angered by the lack of one-to-one movement in the overnight rate and the 5-year rate.
Canadian Data Roundup
Canadian Data Roundup
Canadian Data Roundup
The Bank of Canada remains hawkish (by modern standards), and the policy rate is marching higher. Unless there is a surprise slowdown in inflation (or activity), the policy rate is on track to hit 2.5-3%. As the figure above suggests, that might be enough to get the 5-year Government of Canada yield to break above its highs for the post-Financial Crisis period. The 5-year is already pricing in rate hikes, and so the more bond-bearish commentators might be angered by the lack of one-to-one movement in the overnight rate and the 5-year rate.