‘Go with’ or go the other way?

The big news in Canada is the unexpected heat in the latest batch of CPI numbers. The reacceleration of Canadian prices may see the Bank of Canada respond with an interest rate hike later this summer. In this episode of Curve Your Enthusiasm, Ian is joined by Jonathan Guilford, and the duo begin the episode by taking stock of what happened over the past week. John opines on the ‘why’ and the ‘how’, while Ian discusses the risks surrounding ongoing repricing to continue. Ian discusses how a single hike from the BoC will not prevent a bond market rally later in the year, while John discusses why the curve is most likely to steepen after the summer. The duo end the episode discussing their favorite trades, and why Jonathan sees continued weakness in the 5yr sector of the curve regardless if the BoC hikes or not.