The Globe and Mail reports in its Tuesday, July 11, edition that the market-implied odds that
the Bank of Canada raises rates on
Wednesday are at 94 per cent, up
from just 5 per cent a month
ago, according to trading in overnight
swaps. A Bloomberg dispatch to The Globe reports that policy makers' comments triggered
the swing. BOC Governor
Stephen Poloz and senior deputy
Governor Carolyn Wilkins jolted
markets last month with talk of
tightening. On Friday, data showing
faster employment growth
solidified the view that the central
bank will hike.
One-week risk reversals, which
help quantify the appetite for
protection, are trading above
three-month risk reversals for
the first time since the U.S. presidential
election triggered a rally
in the U.S. dollar. That crossover
has only happened three times
in the past seven years, suggesting
investors are preparing for a
potentially extreme event.
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