Markets are pricing in only a 1% chance of a BoC hike at its next rate meeting on Wednesday. Canadian bond investors clearly aren't worried about an inflation resurgence to the same extent as their counterparts down south.
Unfortunately, as they often do, U.S. yields have been driving the bus on Canadian rates. Following a string of worrisome North American jobs numbers and inconclusive inflation data, the 4-year swap—MLN's preferred fixed-rate indicator (chart below)—is up 55 bps in four weeks.
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