BoC: Expect to see 3 more hikes next year - TDS

According to analysts at TD Securities, the Bank of Canada will reach the end of its tightening cycle in 2019 and expect to see 3 more hikes next year, and in light of the recent swoon in commodity prices, markets have started to under-price the BoC's terminal rate.

Key Quotes

“As long as the BoC doesn't lift rates above 2.50%, we do not think the curve will flatten much from here. Linkages to US rates are strongest at the 10-year point of the CAD curve, and our US forecast implies that 10s will be the weakest performers in the GoC space in 2019.”

“GoC supply should increase in FY 2019-20 due to rising refinancing needs on continued fedearal deficits, but issuance in the long-end will remain scarce. We look for 10s30s trade in a tight range around zero.”