Week Ending June 7, 2026
BoC June Pause Extends Canadian Duration Premium Despite Fed Hawkish Turn
Policy Rates
🇨🇦
0.00%
BoC
🇺🇸
0.00%
Fed
🇪🇺
0.00%
ECB
🇬🇧
0.00%
BoE
At a Glance
🇨🇦 10Y
0.00%
0bps
🇺🇸 10Y
0.00%
-11bps
IG Spread
0bps
Tight
HY Spread
0bps
Tight
Duration: Bullish
Credit: Cautious
Quality: Positive
Key Takeaways
Rates: Canadian duration advantage expands as BoC easing cycle continues while Fed maintains restrictive stance, with GoC 10Y at 3.47% offering 103bps premium creating sustained institutional opportunities.
Credit: Quality requirements intensify with AA-rated minimum thresholds approaching 99% as credit deterioration accelerates while Canadian corporate allocations expand on superior fundamentals.
Hedging: Government allocation maximization continues with 98% targets as systematic risk reduction accelerates while maintaining extended duration positioning on central bank policy divergence.
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