The Bank of Canada has kept the target overnight interest rate steady at 1%. This surprised nearly nobody. Their statement is relatively unchanged from the prior one.
The chart to keep looking at is not the BAX futures, but rather the 10-year benchmark government bond yield:
With the yield spread from short-term rates to the 10-year at about 205 basis points, the bank is unlikely to lift rates anytime soon.
BAX futures are as follows:
|Month / Strike||Bid Price||Ask Price||Settl. Price||Net Change||Vol.|
|+ 11 JN||98.695||98.705||98.695||0.005||12727|
|+ 11 JL||0.000||0.000||98.630||0.000||0|
|+ 11 AU||0.000||0.000||98.615||0.000||0|
|+ 11 SE||98.630||98.640||98.630||0.000||31347|
|+ 11 DE||98.500||98.510||98.480||0.020||37387|
|+ 12 MR||98.350||98.360||98.310||0.040||24564|
|+ 12 JN||98.200||98.210||98.140||0.060||13081|
|+ 12 SE||98.040||98.050||97.970||0.070||3855|
|+ 12 DE||97.870||97.890||97.790||0.090||809|
The market has priced in a rate hike by year’s end, but I do not think this projection will come to fruition – come December, the 98.5 price will be likely around 98.7 – a thin value bet could be placed here.