Canada Is Tapering Bond Purchases. What That Means for US Markets.

In its Wednesday policy statement, the BoC said it would keep rates steady but reduce the size of its weekly bond purchases by 1 billion Canadian dollars, to C$3 billion.

In a note on Thursday, NDR said investors should care about the U.S.’s northern neighbor because it “could be considered a leading indicator for other major central banks.” NDR also found that U.S.

The benchmark 10-year Canadian bond yield crept up just two basis points, or hundredths of a percentage point, after the news; it made larger moves in the preceding week.

And as of Tuesday, Canadian markets priced in the BoC’s first rate increase in October 2022, according to BCA.

In fact, the expectations for tightening this year led the Canadian bond market to lose more than 4.1% in local currency through April, according to BCA, a larger loss than the four-decade record set in U.S.

Strategists at Wells Fargo don’t think the BoC’s decision changed the picture materially for the Fed either.

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