07:58 AM EST, 11/15/2024 (MT Newswires) -- RBC said its call on the Bank of Canada is unchanged with a 50bps rate cut as the path of least resistance in December unless the data comes in hot, followed by steady 25bps cuts after down to a 2% terminal rate.

The move higher in front yields has been solely due to a re-pricing of the United States Federal Reserve and has nothing to do with domestic fundamentals, noted the bank.

RBC expects a self-reinforcing cycle between macro and policy that leads to lower bond yields, steeper curves, and further Government of Canada outperformance versus the US Treasury (UST). Markets surely won't move in a straight line, but the bank thinks the macro forces are strong and any countertrend moves should be faded.

Nonetheless, RBC has slightly raised its yield forecasts due to upward revisions to UST yields.