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‘This Is Wild’: Canadian Rates Go Nuts On BoC Blindside
The Bank of Canada on Wednesday became the latest central bank to suggest (tacitly) that tighter monetary policy will be effective at controlling cost-push inflation.
The BoC ended QE and adopted hawkish forward guidance around rates. Bond-buying will now be confined to reinvestments to replace maturing securities.
The statement cited inflation. "The recent increase in CPI inflation was anticipated in July, but the main forces pushing up prices – higher energy prices and pandemic-related sup
The statement about BOC challenging the status quo was one that caught my attention for sure… Thought of putting on some VIX and figured I had a few days to spare,,, kind of like that Deer in the headlights… I’ll be quicker next time..!!
I dunno. When it comes to inflation, I think a lot of people are getting out over their skis, and today’s market action would seem to confirm. Per McElligott, a lot of portfolio managers woke up this morning and realized that short bonds was the most crowded trade on the planet, looked at short-term “peak” revenue numbers from Mr. Softie, FB, and others, and decided to sell some of their winners and use the proceeds to hedge the risk of the “unthinkable”: that inflation is transitory and yields on the 10yr aren’t going much higher than the 1.63 we saw last week.