Subdued Market Reaction to Canadian CPI Data

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Market reaction has been subdued to today’s Canadian CPI data, reflecting the fact the headline number came in as expected and there’s little in the report to shake up views of where monetary policy is heading.

Market reaction has been subdued to today’s Canadian CPI data, reflecting the fact the headline number came in as expected and there’s little in the report to shake up views of where monetary policy is heading. Some core readings of inflation came in slightly lighter than the Street consensus but nothing that would spark a lot of repositioning in money markets. The Canadian dollar barely budged, keeping within the North American morning trading range of between 72.

78 cents US and and 73 cents US, not much change on the day. It’s a similar case in bonds. The Canada two-year bond yield, which is particularly sensitive to Bank of Canada monetary policy moves, is up about 3 basis points but well within the day’s trading ranges. The Canada five-year is up about 5 basis points. Those moves in yields had a little more upward momentum than their U.S. counterparts after the data release, which suggests markets don’t view the inflation numbers as particularly dovish. Implied interest rate probabilities in swaps markets aren’t budging much eithe

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