4% 1yr GIC - should I lock in or wait some more? | EQ Bank | Discussion forum

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4% 1yr GIC - should I lock in or wait some more?
June 24, 2022
12:09 pm
TopPocketFind
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June 24, 2022
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The 1yr rate has been going up steady. As of today 4%. Have we reached the top or will this keep climbing?

June 24, 2022
2:29 pm
Fogoguy
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I just pulled the trigger today. It's kinda hard to resist jumping on the bandwagon now that it's at a full 4%... and it's also becoming apparent that EQ isn't too serious on raising their HISA rates much at all.

June 24, 2022
5:37 pm
LK
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I think there will be a few more small bumps prior to July 13 interest rate announcement. Maybe up to 4.10 by July 13. Reasoning is what happened in the two weeks prior to the last interest rate announcement. But who knows?!

June 25, 2022
7:11 am
agit
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BOC, Fed and EU all clearly stated that rate will go up to 3.00% and maybe higher CPI still going up. Wouldn't be wise to wait at least until BOC reach 2.5%-3.00% ?

June 25, 2022
7:18 am
Alexandre
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agit said
BOC, Fed and EU all clearly stated that rate will go up to 3.00% and maybe higher CPI still going up. Wouldn't be wise to wait at least until BOC reach 2.5%-3.00% ?  

I already see articles on CNN Business and Canadian financial web sites sharing the opinion Central Banks might have gone too far already, recession is inevitable, stock market will crash, etc., etc.

Now, the question is will US government in the next few months be more concerned with weak stock market performance impacting the rich party donors, or with high inflation that is on minds of middle class and poor folks who are majority of voters.

June 25, 2022
7:58 am
cgouimet
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Alexandre said

I already see articles on CNN Business and Canadian financial web sites sharing the opinion Central Banks might have gone too far already, recession is inevitable, stock market will crash, etc., etc.

Now, the question is will US government in the next few months be more concerned with weak stock market performance impacting the rich party donors, or with high inflation that is on minds of middle class and poor folks who are majority of voters.  

Judging from TSX, DJ el al volatility in the last few months those opinions are a function of Day of Week, Time of Day and possibly the position the toilet seat was last left in ...

CGO
June 25, 2022
8:00 am
canadian.100
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agit said
BOC, Fed and EU all clearly stated that rate will go up to 3.00% and maybe higher CPI still going up. Wouldn't be wise to wait at least until BOC reach 2.5%-3.00% ?  

“Clearly stated” you say?
Things can change - not carved in stone. Once inflation stabilizes (and it will at one point) rates could also stabilize. 6%, 7% rates not for sure and even if they do arrive, they could be short lived. Once a recession is confirmed (at one point - who knows when), do u really think interest rates can continue to rise?

June 25, 2022
8:56 am
con6450
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I look at a yield curve spread perspective:

  • Bank of Canada policy interest rate is 1.5%. 1 month yield is similar. HISA promo for retail is around 2.75%-3%, a spread of 1.25%-1.5% from Bank of Canada risk-free rate.
  • 1 year Canada bond is at 3.1%. So a 4% GIC is a spread of 0.9%.

Granted the HISA is a "promo" while the GIC is not a "promo".

I'd also try to look up rates for debt by Canadian banks on the market but that information seems to be much harder to obtain than risk-free yield curve.

Another thing I look at is US Fed Funds Futures (I don't know what the CAD equivalent is, if it even exists at all). It suggests a 1.6% rise in Fed Funds rate by Dec 2022. (3.3% vs 1.7%) So potentially 5% HISA (2% higher than the current best promo) isn't so unlikely as we think?

Just my two cents. I might pull the trigger on this one, but definitely not dumping everything into it. Thanks for sharing!

June 29, 2022
5:44 am
Alexandre
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TopPocketFind said
The 1yr rate has been going up steady. As of today 4%. Have we reached the top or will this keep climbing?  

It is now 4.15%. That answers you question.

I wonder if we are going to see 5% 1 year GIC by August 2022.

June 29, 2022
6:36 am
savemoresaveoften
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Alexandre said

It is now 4.15%. That answers you question.

I wonder if we are going to see 5% 1 year GIC by August 2022.  

Zero chance of 1y reaching 5% by august.

While I am also thinking when to start locking in, I am more concerned the term to lock in, to try to plan ahead for the next round of renewal to not coincide with the rate cut period.

June 29, 2022
9:09 am
Alexandre
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savemoresaveoften said
Zero chance of 1y reaching 5% by august.

I bookmarked this forum topic and put reminder in my calendar for August 31st to check 1 year GIC rates. Will it be "never say zero chance?" Will see.

June 29, 2022
9:28 am
savemoresaveoften
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Alexandre said

savemoresaveoften said
Zero chance of 1y reaching 5% by august.

I bookmarked this forum topic and put reminder in my calendar for August 31st to check 1 year GIC rates. Will it be "never say zero chance?" Will see.  

Make sure it’s calendar year 2022, not 2023 or … lol
We shall see in roughly 2 months. Even 4.5-4.75% is a stretch in my mind, my 2 cents.

June 29, 2022
9:55 am
Alexandra
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Alexandre said

It is now 4.15%. That answers you question.

I wonder if we are going to see 5% 1 year GIC by August 2022.  

Also EQ 15 Mo GIC is now @ 4.25%

June 29, 2022
8:36 pm
RetirEd
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Since TFSA money isn't what I reach for first when I need liquidity, I'll be going 5-year when I lock in the TFSA cash. Probably mid-month after the latest BoC rate setting, as a hedge against my August-maturing money that may not beat a coming recession or crash.
RetirEd

July 7, 2022
12:52 pm
Alexandre
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savemoresaveoften said
Even 4.5-4.75% [1 year GIC rate] is a stretch in my mind  

You should not have lowered my expectations. I am confident I'll get you on that one, because we are getting very close, and it is not even August yet.

Motive.jpg

July 7, 2022
7:00 pm
savemoresaveoften
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Unless BoC delivers 1% next week which I don’t think they will, 5% by August remains a no-go. Even if they do hike 100bp, 5% 1 year remains to be seen. It ain’t happen until it actually does.

July 7, 2022
7:27 pm
phrank
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We were spoiled for decades now with peace and gradual change. Change can happen quickly and be fierce. I've experienced this in a few ways and it's why as long as I can find HISA's and other means which give returns I'm happy with, I'm not locking in and I think a fair amount of people feel this way and that's what's causing the terms to go up quite quickly.

There are those who say you're losing by not locking in to the slightly higher rates now, but I'll take those small losses vs waking up to double digit rates being offered while I have funds locked in at 5%.

July 7, 2022
7:52 pm
HermanH
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phrank said There are those who say you're losing by not locking in to the slightly higher rates now, but I'll take those small losses vs waking up to double digit rates being offered while I have funds locked in at 5%.  

What would trigger your willingness to lock in for more than a few years?

July 8, 2022
5:12 am
canadian.100
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HermanH said
What would trigger your willingness to lock in for more than a few years?  

I think that once the leadership advises we are in a recession (and that does seem to be on the horizon), rates may stabilize fairly quickly and it may be time to lock in - I would lock in for various terms (the ladder) not all my funds in just long term.

July 8, 2022
8:20 am
Bill
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To lock my money for more than (at the very most) a year where I actually can't get at it at all would take a lot more political, social and economic stability. So higher bar for me, personally.

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