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Scope for 5-Yr Canada Govt Bonds To Outperform, says National Bank

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With two Bank of Canada rate hikes still priced for 2026, there's scope for five-year GoCs, and smaller duration/steepeners more broadly, to outperform, said National Bank of Canada in an Auction Preview related to 5-Years (3.00% September 2031).

National Bank believes the BoC will be sidelined until 2027.

Outright, it noted 5s were about 6 bps cheaper relative to where they were at the last auction (30-Apr) and have seen the most pronounced backup in yield across the curve more broadly since that time, about 17 bps cheaper than where the Sep31s were first issued at the start of April.

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