Monday Market Minute | Nov 25, 2024

Markets price another jumbo cut in December — 3.25% in sight

What Moved

Heading into the final BoC meeting of the year on December 11, bond markets priced a second consecutive 50bp cut at over 70% probability. The case was compelling: GDP growth had slowed, unemployment was rising, inflation remained at target, and the looming tariff threat from the US added a new downside risk. At 3.75%, the overnight rate was still considered restrictive — the Bank had room to move.

Why It Matters

A December jumbo cut would bring the overnight rate to 3.25% — within striking distance of the Bank's estimated neutral range of 2.50–3.00%. Total easing for 2024 would be 175 basis points, the most aggressive cutting cycle since the 2008 financial crisis. For private market investors, the rapid rate normalization was compressing the window for transitional trades and accelerating the shift to a new-normal allocation framework.

Signal to Watch

The BoC's updated economic projections in December would reveal whether the Bank expected further cuts in 2025 or a pause near neutral. The forward path mattered enormously for private credit yields, PE deal multiples, and housing market trajectory heading into the new year.

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