CANADA: 3rd Conservative MP Crosses Floor, Could Set Up Liberals For Majority

The CAD sovereign curve has twist steepened since this morning’s inflation data, which showed progress on CPI-Trim and CPI-Median measures (the latter was two tenths below expectations at 2.5% Y/Y vs 2.8% prior) and should help keep near-term rate hike speculation subdued.

• The Dec-26 CORRA future is up 2 ticks on the session at 97.570. The contract has recovered from the December 10 low of 97.305. However, it remains comfortably below the 97.675 seen ahead of the strong November employment report on December 5 – implying year-end hike pricing remains a little sticky.
• TD Securities write that “We'd consider this quite a contained reaction given the print (likely partially due to the US holiday), but we'd imagine this sets the stage for future reactions to dovish data to be more notable.”
• 2-year GoC yields are down about 1bp to 2.534%, with 10-year yields now little changed relative to pre-data levels at 3.385% (and +1.5bps on the session).
• 30-year yields are up 2.5bps today, seemingly tracking price action in core FI counterparts.
• A reminder that the US MLK-day holiday is likely thinning out volumes and liquidity in CAD rates.

US Treasury Secretary Scott Bessent has delivered brief remarks to reporters at the World Economic Forum in Davos, Switzerland. 

• Bessent confirms that Trump will attend the summit on Wednesday and Thursday to “sum up the year” and “talk about his thoughts going forward.”
• Bessent says in response to a question asking what the US wants to achieve at Davos: “’America First’ does not mean America alone and I think President Trump will be talking about ‘this is what American leadership in the world looks like’".
• Bessent adds that during Washington’s G20 leadership next year, the US will “identify the lack of growth as the greatest threat to financial stability.” Says that the US will push for growth and regulation. 
• Asked about his communication with EU officials on Greenland. He says he has been travelling so unable to communicate but he spoke to Trump and “evidently there are a lot of inbounds and I think everyone should take the president at his word.”
• On a follow-up question asking about Trump’s reported letter to Norwegian President Jonas Gahr Støre: “I don’t know about a letter to Norway. I think it’s a complete canard to think the President is doing this about a Nobel Prize. The president is looking at Greenland as a strategic asset for the US. We are not going to outsource our hemisphere’s security to anyone else.”
• He concludes by saying he thinks it “would be very unwise” for the EU to retaliate, when asked about the possibility of Brussels deploying its Anti-Coercion Instrument.  

• Bank of Greece Deputy Governor Theodore Pelagidis speaks to MNI -- On MNI Policy MainWire now, for more details please contact sales@marketnews.com