Not a pretty picture

This is the chart that should have the Bank of Canada and the Canadian government trembling. The yield curve is now inverted out to 10 years after a sharp rally in 10s late last week. Yield fell 20 basis points in two days to put them below the overnight rate of 1.75%.

In a recent note, JPMorgan said it "doubled down on our bearish CAD views" including NAFTA deal delays. They see a rise to 1.3600 in Q3 for USD/CAD.





Others are much more bearish, TD now sees the pair in a 1.35-1.40 range and an analyst at Fidelity who sees USD/CAD hitting 1.61.

