Yields Remain Elevated but Below Session Highs

Stocks are stuck in neutral. The 2-year GoC peaked at 1.606% shortly after the first round of U.S. data, quickly pulled back to 1.585% before tracking to the 1.60% area only to slide to 1.595%.

The 5-year tested 1.82% before easing to 1.813%, while the 10-year swung from 2.098% to 2.069% then back to 2.097% amid the rounds of U.S. data this morning. The 10-year has slipped to 2.082% currently. The yield gyrations come amid a busy day of news, data and events.

Overnight, North Korea performed another missile test and London saw a terror attack. Domestic data featured two reports (net worth, existing home sales) of interest but ultimately had little impact on ongoing expectations for at least one more Bank of Canada rate hike this year.

BoC Senior Deputy Governor Carolyn Wilkins, speaking late Thursday, reminded that all meetings are “live”. U.S. data revealed the expected Harvey related impacts, which dented Q3 GDP estimates. But the unwinding of recent safe-haven flows and hawkish views from BoE and European Central Bank policymakers has boosted projections for a Fed hike in December.

Adding it all up, bond yields are 2 to 3.5 basis points firmer along the curve. The S&P/TSX is flat, trailing mild gains on Wall Street as NYMEX crude holds below the $50.00. The slip in crude to $49.75 from $50.10 has lifted USD/CAD to 1.2207 from a session low of 1.2126.

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