18. March 2011 11:29
Rates are essentially flat to yesterday’s close, but not for lack of news in the markets.
Generally, risky assets appear to be in favour this morning, evidenced by rallies in the equities and commodities markets. Events influencing markets this morning include a cease-fire in Libya and some positive developments in Japan.
Normally, this increase in risk appetite would exert upward pressure on bond yields, but the offset in the Canada this morning is quite weak inflation numbers from February. Every measure of the CPI was weaker than the market expected, with the key “Core CPI”, which removes the impact of volatile items such as food and energy, was +0.9% year-over-year. Expectations were for a +1.1% increase, while January’s print was +1.4%. The Bank of Canada makes policy decisions with the goal of keeping this metric at around 2.0%.