SVB Impact: Credit Markets Suddenly Price in Bank of Canada Rate Cuts This Year, Bond Yields Plunge

Monday, March 13, 2023

Vancouver, BC, March 13, 2023--Bond markets have made a dramatic reassessment of future rate moves by central banks in the wake of the Silicon Valley Bank failure and bailout- including that of the Bank of Canada.

Swaps-based implied probabilities of future moves by the Bank of Canada suggest decent odds of a quarter-point cut at its next meeting on April 12. And markets are pricing in at least 50 basis points of interest rates cuts by this summer.

This morning, the market's assessment of future BoC moves has shifted with a speed seldom seen. It was accompanied by a big dive in bond yields.