US: CANADA: Trudeau Will Reject Unfavourable Compromise On Tariffs - Bloomberg

The January ECB decision brought few surprises, with a 25bp cut delivered alongside unchanged guidance and reaffirmed confidence in the inflation outlook (MNI’s full review is here). Post-decision ECB-speak has similarly been unsurprising, while customary post-meeting source reports provide did not trigger any meaningful repricing in EUR rates (with other domestic and global drivers more in focus). 

• Reuters’ sources piece on Thursday evening largely re-iterated the key themes from the MNI Policy Team’s pre-January meeting reporting. MNI’s story highlighted that a 25bp cut in March is widely expected amongst policymakers, while there are divisions over the timing of a potential third cut.
• Bloomberg sources suggested the ECB may stop describing monetary policy as “restrictive” come March. Expectations around such a move may develop further following the release of an ECB staff paper on neutral rates this Friday. We expect this report to contextualise President Lagarde’s most recently cited neutral range of 1.75-2.25%, which was a little tighter than the 1.75-2.50% range provided at the December ’24 press conference.
• The week ahead sees Executive Board appearances from Chief Economist Lane (Wednesday) and Vice President de Guindos (Friday).
• In the following publication, we provide a summary of ECB-speak between January 30 and February 3: 250203 - Weekly ECB Speak Wrap.pdf

• CAD rates have seen a sizeable paring of earlier gains on Mexico President Sheinbaum saying the US has agreed to pause tariffs for one month (since confirmed by Trump).
• There’s the clear assumption here that Canada will see a similar development (presumably helped by last week’s Reuters piece on the potential for a delay to Mar 1) but nothing concrete has come since Trump and Trudeau’s earlier call and with another call set for 1500ET today.
• Dec’25 CORRA futures implied yields have lifted some 8bps intraday but are still 12bp lower on the day. They're back close to where they traded at the US crossover after thin overnight trade.
• Terminal CORRA yields are seen at 2.27% (BoC neutral rate 2.25-3.25%), 45bp lower since Trump’s inauguration.
• As for the very near-term, odds of an inter-meeting cut from the BoC have been trimmed from earlier levels, with one-month OIS showing almost 3bp of cuts vs between 4-5bp earlier. For the meeting itself on Mar 12, there are 27.5bp of cuts prices vs 19bp on Friday.

• Gold printing a fresh record high in dollar terms for a third consecutive session today, with spot showing above the Friday highs of $2817.2 shortly following the cash open. Tariff news the natural driver of safe haven flow, but the slippage in core US yields proves another supporting driver.
• What possibly stands out more is the upside in spot gold in both CAD and EUR terms, up near 2% apiece to post some of the best single-day returns since the US election in November.
• Presumably gold is still subject to downside risks from any backtracking on tariffs - leaving much headline risk on the second Canada-US call at 3pm ET, especially as Sheinbaum's office has confirmed a delay to the installation of tariffs for one month.
• In USD terms, price has risen through first resistance at $2817.6 next, a Fibonacci projection.