CANADA: Macklem Helps Extend US Service PMI Driven Rates Rally
Feb-21 17:49
- BoC Governor Macklem’s dovish prepared remarks (in full here) on trade wars have driven a renewed rally in GoCs and also see USDCAD lift back to session highs around 1.4210 (but still firmly within yesterday’s range).
- GoC yields are now 5.5-8.5bp lower across the curve. 2Y yields lag at -5.5bp, of which almost 2bp has come since the text was released. They’ve had a mixed session so far, having at one point climbed 3bps for back unchanged on the day after a strong retail sales report before spillover from the surprise slide in the US services PMI.
- BoC-dated OIS still only shows 8bp of cuts for the Mar 12 decision although CORRA implied terminal pricing has given back a little more of the week’s climb and now sits at 2.58% in the Mar’26 contract (vs BoC neutral seen between 2.25-3.25%).
- The Bank updated detailed tariff scenario analysis with its Jan MPR, with heavy hits to growth but also some higher inflation, although his comments today are more one-sided:
- demand will fall more quickly than supply if high U.S. tariffs are imposed, adding lower interest rates could help ease downward pressure on demand.
- "We may eventually regain our current rate of growth, but the level of output would be permanently lower. It’s more than a shock—it’s a structural change."
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FED: US TSY 19Y-10M BOND AUCTION: NON-COMP BIDS $106 MLN FROM $13.000 BLN TOTAL
Jan-22 17:45
- US TSY 19Y-10M BOND AUCTION: NON-COMP BIDS $106 MLN FROM $13.000 BLN TOTAL
US: Majority Of Americans Think Trump's Proposed Tariffs Will Raise Costs
Jan-22 17:44
A survey from Ipsos has found that a majority of Americans believe that proposed by US President Donald Trump will raise the price of consumer goods.
- Ipsos: "...a majority of Americans (66%) think these tariffs will raise the cost of the goods they buy, according to the latest data from the Ipsos Consumer Tracker. That perception is practically unanimous among Democrats (at 87%), but nearly half of Republicans feel the same."
- Ipsos notes: "We've also seen that high confidence the tariffs will happen in the first place: 81% of Americans think"it's likely that Trump will try to increase tariffs on imports from China and Mexico," according to a recent Ipsos poll for The New York Times."
Figure 1: “To what extent do you agree or disagree with the following? - Tariffs will raise prices on goods I buy”
Source: Ipsos
US TSYS/SUPPLY: Preview: $13B 20Y Bond Auction Re-Open
Jan-22 17:40
Tsy futures are trading weaker, near recent lows (TYH5 currently at 108-15, -8.5) ahead today's $13B 20Y-Bond auction re-open (912810UF3) at 1300ET. WI is currently running at 4.910%, 22.4bp cheap to last month's reopen tail:
- December auction recap: Tsy futures hold weaker (TYZ4 trading 111-04.5, -6.5), after $13B 20Y bond auction reopen (912810UD8) tailed again: 4.686% high yield vs. 4.671% WI;
- That kept the consecutive streak of tailed auctions alive at 4 for the 20Y, with the latest sale showing fairly average statistics though better than November (which saw a high yield almost identical to December's sale, at 4.680%):
- Bid-to-cover of 2.50x was likewise unremarkable vs the 5-auction average 2.53x, but better than November's 2.34x.
- Dealers took down 17.9% of competitives (vs 22.6% prior, 14.8% 5-auction average), with indirects 62.0% (69.5% prior, 70.1% avg) and directs 20.1% (7.9% prior, 15.1% avg).
- Timing: today's 20Y note results will be available shortly after the competitive auctions closes at 1300ET.
