CANADA: Avery Shenfeld of CIBC World Markets says with BOC Governor
Carney’s deemed hawkish remarks last week, the market is already
starting to price in rate hikes after mid-year. So far, he notes, “the
OIS curve still has less than 75-bp course of rate hikes over the first
three post-June BOC rate setting dates, a bit below even our relatively
dovish forecast for the projected pace.” While CIBC sees the BOC moving
“very slowly” after the initial 75bp-100bps of rate hikes, the market is
likely to see things otherwise. “History shows that in the market’s eye,
rate hikes are like potato chips – once you open the bag and take the
first bite, you end up eating them all,” Shenfeld says. Once investors
see one BOC rate hike, additional hikes will begin to be priced in,
“whether justified or not,” he observes.