Money markets are betting the U.S. Federal Reserve will end its tightening cycle with a higher policy rate than the Bank of Canada. Read on.
The BoC has set the pace for tightening this year among central banks overseeing the 10 most traded currencies, lifting its key interest rate by 300 basis points to a 14-year high of 3.25 per cent to tackle soaring inflation.Sign up to receive the daily top stories from the Financial Post, a division of Postmedia Network Inc.By clicking on the sign up button you consent to receive the above newsletter from Postmedia Network Inc.
Investors expect the Fed’s policy rate to reach a terminal rate of about 4.60 per cent by the end of the first half of 2023, compared to around 4.10 per cent for the BoC’s policy rate. Just a few weeks ago, the end-point for both central banks was seen at roughly 3.75 per cent.Article content Speculators have slashed their net long positions in the Canadian dollar to the lowest level since early June, data from the U.S. Commodity Futures Trading Commission showed on Friday.
And the inversion of the yield curve, a potential harbinger of recession, has grown much deeper in the Canadian bond market than in the U.S. market.
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