Week Ending July 19, 2026
Central Bank Triple Header Looms as Canada-US Yields Diverge
Policy Rates
🇨🇦
0.00%
BoC
🇺🇸
0.00%
Fed
🇪🇺
0.00%
ECB
🇬🇧
0.00%
BoE
At a Glance
🇨🇦 10Y
0.00%
-8bps
🇺🇸 10Y
0.00%
+3bps
IG Spread
0bps
Tight
HY Spread
0bps
Tight
Duration: Neutral
Credit: Cautious
Quality: Positive
Key Takeaways
Rates: Canada's 10Y rallied 8bps to 3.57% on growing bets for a BoC resumption of cuts, while US 10Y backed up 3bps to 4.58% as sticky core PCE reduces the odds of a July Fed cut.
Credit: IG spreads widened modestly to 79bps from 73bps even as HY tightened further to 272bps, with BlackRock and Wellington warning the quality-tight backdrop leaves little cushion against a growth shock.
Hedging: With FOMC, ECB, and BoE all meeting this week, institutions favor barbell structures and agency MBS for volatility protection while trimming outright duration bets pending clearer central bank signals.
Significant Moves
US 10Y Treasury+11bps
4.19%→4.26%
Reflects growing market concern about inflation persistence limiting Fed easing
IG Credit Spreads-6bps
79bps→73bps
Further tightening to decade lows increases vulnerability to reversal
View Shifts
TD Securitiesoutlook
Constructive on duration→Constructive with hawkish B...
Added caution on BoC policy trajectory while maintaining duration preference
BlackRockcredit
Agency MBS very cheap→Agency MBS significantly un...
Increased conviction on MBS vs corporate credit relative value opportunity
New Calls
Scotiabank projects 50bps BoC hikes to 2.75% by H2 2026 as inflation persistence emerges
PIMCO increases conviction on agency MBS as 'significantly undervalued' vs IG corporates
Goldman Sachs maintains two Fed cuts in 2026 despite market pricing just one