Canadian Market Outlook
GoCs have extended higher and the curve has maintained its flattening bias following disappointing European services PMIs. Fears around Greece exiting the European Monetary Union linger. And crude oil has hit a fresh five-year low, further clouding Canada's outlook. The 10-year yield had eased 3.5 bps to 1.655%, on track to test the July 2012 trough at 1.565%. The 2s10s spread had narrowed an additional bp to +70 bps. And USD-CAD had bounced to the 1.1780 area, but was holding comfortably below Monday's trend high at 1.1818.
In data, market watchers await the Industrial Product Price data at 8.30 ET to see if it is dragged lower by plunging energy prices. The market will also key off U.S. indicators, including ISM services.
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