Scotiabank Market Points U.S. and Canada rates update
Aug 13, 2025
Boris Sender is the Director of U.S. Rates Strategy at Scotiabank, while Roger Quick leads Canadian Rates Strategy. They delve into the impact of U.S. tax cuts and tariffs on economic growth and job creation. The conversation highlights Canada’s resilience in trade tensions and the implications of shifting fiscal policies. They analyze labor market trends affecting the Federal Reserve's decisions, along with strategies for navigating Canada’s interest rate landscape amid rising deficits and infrastructure funding needs.
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Play The Front-End With Month-To-Month Trades
- Use short-end structures to express view that cuts are misallocated across months, e.g., paying September vs receiving October.
- Trade H6/H7/H8 flys or front-end steepeners to capture repricing opportunities.
Short Canadian Two-Year Ahead Of Cuts
- Position for lower Canadian two-year yields as Bank of Canada cuts resume and growth weakens.
- Consider front-end rate exposure because the two-year can move materially lower over six months or more.
Treasury Keeps Coupon Auctions Steady
- Treasury plans to keep coupon auctions unchanged and meet extra issuance via bills, limiting long-end supply pressure.
- Coupled with tariff clarity, this reduces some deficit anxiety and supports longer-dated Treasuries technically.