Two Factors Reinforce RBC's Peak Rates View

Last Updated: Friday, May 20, 2022 3:28 PM | MT Newswires

RBC in its North America Rates Strategy note of this Friday said over the past month its view had been that Q2 will mark the peak in rates, Canada and US, across the belly and long end. It, the bank claimed, had generally been met with skepticism as consensus appears to favor higher/stickier inflation, more aggressive rate hikes, and various other factors (inflation risk premium, QT) that could push rates higher. "The reality is," RBC said, "that within a volatile range, yields are unchanged since mid-April, which continues to indicate to us that sentiment was too one-sided and the catalyst for another material and sustained leg higher is lacking. The shifting correlation between stocks/bonds and increasing growth/recession fears supports our view that yields have peaked and probably edge lower over the year."

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