Globe and Mail Wednesday, May 12, 2010

Andrew Willis

Bond traders are still expecting the Bank of Canada to raise short term interest rates on June 1, but the move is no longer the sure bet it was a few short weeks ago.

Credit markets are currently putting a 84 per cent probability on a 25 basis point hike in overnight rates after the central bank meeting in June, according to a report that TD Waterhouse published late Tuesday on BAX sentiment, a reflection of what the futures market is predicting. BAX sentiment put a 100 per cent probability on a hike prior to the most recent Greek credit crisis, and European financial bailout.

BAX sentiment puts a 94 per cent probability on another 25 basis point rise in rates at the July 20 Bank of Canada meeting