The OIS market pricing in a rate cut, but don't believe the hype, says TD's Andrew Kelvin. While the OIS market sees the Bank of Canada standing pat when it announces its policy rate Tuesday, it has priced in a roughly 50% chance of a 25-bps rate cut between October to January, Kelvin says. That's down slightly from Friday's OIS levels of about a 56% chance of a rate cut after the poor US nonfarm payrolls number. For a rate cut to happen, he notes, "you'd need a bank funding crisis that would impact Canada or a severe downturn in the U.S."
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