Andrew Kelvin, senior Canada rates strategist at TD Securities, suggests that they are expecting that even with a decent rebound in Canadian growth, BoC’s overnight rate is likely to remain at 1.75% through all of 2020 in addition to 2019.
Key Quotes
“We believe Governor Poloz when he says the Bank is data dependent, and experience supports that assertion. Looking at the recent evolution of the data, near-term risks skew decisively towards easing. If the BoC moves in 2019, it is more likely to be a cut.”
“As long as risks skew towards rate cuts, front-end rates should remain pinned below overnight. At the same time, we expect modestly higher Treasury yields to put upward pressure on rates in the belly and long-end of the CAD curve later this year. Taken together, those two factors argue for a steeper curve over a 6-12 month horizon.”
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