- TD see Macklem’s comments as reinforcing a 50bp hike on Oct 26, but are reluctant to extrapolate them much further given the current short shelf-life of central bank comments and with economic data starting to cool.
- They still see a 4.25% terminal (25bps in Dec & Jan) but comments at face value imply upside risk.
- FX: USDCAD dips should be bought, look for 1.40 this year. Have long held the view that more rate hikes will have a perverse effect on CAD as it worsens household debt servicing outlook.
- Rates: Reiterate view of 6m6m-1y1y, 1y1y 1y5y (bull flattening option structure) and 10s30s flatteners. The risks of over hiking are growing.
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CANADA: TD On BoC’s Macklem
Last updated at:Oct-07 11:24By: Chris Harrison
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- TD see Macklem’s comments as reinforcing a 50bp hike on Oct 26, but are reluctant to extrapolate them much further given the current short shelf-life of central bank comments and with economic data starting to cool.
- They still see a 4.25% terminal (25bps in Dec & Jan) but comments at face value imply upside risk.
- FX: USDCAD dips should be bought, look for 1.40 this year. Have long held the view that more rate hikes will have a perverse effect on CAD as it worsens household debt servicing outlook.
- Rates: Reiterate view of 6m6m-1y1y, 1y1y 1y5y (bull flattening option structure) and 10s30s flatteners. The risks of over hiking are growing.
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