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(Bloomberg) -- Don’t expect Canada 10y yields above 2% “unless there is some positive surprise in global growth and inflation that leads to higher rates globally,” Bank of America Corp. analysts led by Carlos Capistran write in July 11 note.

• The BOC’s anticipated rate hike by 25bp on Wednesday will “help keep inflation expectations in check”
• Canada 10y currently yields 1.87%
• Rates climbed after Poloz comments in June “due to an increase in embedded inflation expectations,” but there’s limited scope now for long-term rates to rise on higher inflation breakevens, analysts write
• U.S. would have lower inflation expectations today than at start of tightening cycle if not for election impact; “parallel Canadian program” may lead “expectations to decline over the course of a year”

To contact the reporter on this story: Anna Windemuth in New York at awindemuth1@bloomberg.net

(Bloomberg) -- Following are forecasts for today’s economic releases as compiled by Bloomberg News.

• JOLTs Job Openings 5950; range 5800 to 6000 (5 estimates)
• In April, job openings rose to a record 6.044 million, breaching the 6-million mark for the first time
• In today’s report, the quits rate "deserves heightened attention" to gauge wage pressures; it has "risen only gradually in the current cycle, as many employees might still feel uncomfortable sticking their necks out and departing for other opportunities": Bloomberg Intelligence
• Though it lags the jobs data by a month, the JOLTS report adds context to monthly payrolls figures by measuring dynamics such as resignations, help-wanted ads and the pace of hiring

To contact the reporters on this story: Alex Tanzi in Washington at atanzi@bloomberg.net; Vincent Del Giudice in Denver at vdelgiudice@bloomberg.net To contact the editors responsible for this story: Alex Tanzi at atanzi@bloomberg.net Kristy Scheuble

--AMY THOMSON

(Bloomberg) -- The move higher in EUR rates implied volatility driven by four-sigma move in bunds has been less pronounced than during previous large selloffs (2015 bund VaR shock, 2013 Fed Taper Tantrum), and has kept iTraxx Main spreads subdued, Bloomberg strategist Tanvir Sandhu writes.

• It would require a further spike in implied volatilities to impact long-term investors’ flow dynamics and potentially pressure credit spreads to widen moderately; see chart here of EUR 3m10y implied vs iTraxx Main
  • Still, prudence is required given ECB policy risks; a paradox looks set to emerge on potential paring back of accommodative monetary policy in the face of unconvincing core-inflation normalization
• EUR rates volatility remains relatively contained and below the highs seen before French election; factors that fueled the volatility spike during the 2015 bund VaR shock -- extreme bund valuations and low market liquidity -- are not currently supportive; see more here
• While peripheral rates remain exposed to ECB tapering, posing risks to credit, and Italian bonds are at risk of trading more like credit instruments vs duration assets, ECB has flexibility within QE and is currently overweighting BTPs
  • See analysis here from January 10 highlighting the behavior of credit vs peripheral spreads before ECB started QE, when BTP- bund spread vs iTraxx Main had a R^2 of 0.955
• NOTE: Tanvir Sandhu is an interest-rate and derivatives strategist who writes for Bloomberg. The observations he makes are his own and are not intended as investment advice

To contact the reporter on this story: Tanvir Sandhu in London at tsandhu17@bloomberg.net To contact the editors responsible for this story: Ven Ram at vram1@bloomberg.net Anil Varma