Canadian Dollar: Rates reaction follows GDP – TD Securities

TD Securities Macro Research Insight notes that markets began to sell off again following the flat July Canadian GDP print, despite its underwhelming nature. The move is concentrated in the front to mid-curve, with Bank of Canada (BoC) pricing unchanged and US yields near key technical levels.

Front-end curve under pressure

"While we disagree with the fundamentals of selling-off on such an underwhelming print, the reaction is consistent with recent positioning washouts."

"The move is predominantly focused in the front to mid-part of the curve, as BoC pricing remains unchanged post-print."

"The cross-market move was additionally subdued, as US yields hover around key technical levels."

"We continue to be biased toward 1y5y-1y2y steepeners for a front-end view, and cautiously adding 2-year long positions."