IRAN: Trump Via Truth: Meeting Now To Make A Final Determination On Iran

• BOC: CPI PERSISTENCE WOULD BE A CLEAR SIGN OF NEED FOR HIKE

• +6,000 FVM6 107-26.25, through 107-26 post time offer at 1044:00ET, DV01 $256,700
• The 5Y contract trades 107-25.75 to 26.

BOC Gov Macklem reiterates the overall view on rates from the communications published earlier:

• "What we can control is, we can ensure that these price increases, in particularly this surge in gasoline prices and other fuel prices, it doesn't spread, become generalized, persistent inflation. Maintaining the policy rate today where it is was the right thing to do for today. And you know, as we've indicated, if things evolve broadly in line with the outlook we we've presented, and in particular, oil prices come down broadly in line with the futures curve, something close to the policy rate that we have today is probably about right. Might need a small adjustment, but I think it'd be reasonable to expect small. But if, particularly if energy prices go higher, and particularly if they stay higher for longer, there could well be a need to increase the policy rate to get inflation back to 2%. And really the message is, you know, we're committed to ensuring that inflation does stay close to 2%."
• On the updated MPR potential growth forecasts which show weaker labor inputs but faster-growing productivity despite the negative impact on tariffs, Macklem notes that:
• "Potential output growth is fairly weak in the near term, but as the restructuring advances and as the effects of AI accumulate, productivity growth picks up going forward. So that's built into our projection. You know, is AI having a big effect on our policy decision right now? No, but it is built into our projection. And, you know, it could end up that AI comes faster, has a bigger effect than we've expected. It might take longer. We'll see. That's something we'll be assessing going forward."