As we mentioned last week, and the week prior, the tone of Canadian fundamental releases has turned an important corner & this change in sentiment is best reflected in the rise in both short and medium-term bond yields. The chart above is the 5YR Canadian Bond yield back to Sept 2007. The LT downtrend had already been broken and last week’s price action shows the market simply bouncing off of that long-term price support. The BoC is now expected to start to unwind the extreme levels of monetary accommodation starting as early as Sept or Oct of this year. In practical terms, this suggests that the BoC and the Fed will now be acting more in sync. Expectations of C$ weakness based purely on widening interest rate differentials alone will now start to fade to the background.