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Bond Yields and Economic Downturns
March 9, 2019
2:39 pm
Vatox
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Both the Canadian 5 year bond and the U.S. 2 year Treasury are below the respective central bank rates.

This is bad news.

March 9, 2019
4:15 pm
dealjunkie
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So, let's make a fortune and retire.. whose doin policy hedge funds or boc. I set policy not someone else.. if others thought that way we'd be collectin more interest..

March 19, 2019
8:40 am
Vatox
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ALARM! Dive Dive Dive.

1A7083B2-9D48-4E41-8E09-E044BE6B1823.png

Look at that baby sink. That’s the Canada 5 year bond. Currently 1.6%
That top peak was late October when the last rate hike occurred.

March 19, 2019
9:21 am
canadian.100
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Vatox said
Both the Canadian 5 year bond and the U.S. 2 year Treasury are below the respective central bank rates.
This is bad news.  

Read an article in the Globe and Mail (or might have been the Toronto Star) that Canada may now be in recession. Once the next set of economic indicators comes out in April, we will know how the 1st quarter of 2019 fared. The lower/lowering interest rates would appear to be appropriate at this time.

March 19, 2019
9:46 am
Vatox
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There is definite pressure, from bond yields, to lower the interest rate. I think that would be a mistake as it loosens the efforts to get people to lower debt amounts.

EDIT: even though it would hurt the economy, I think we need austerity.

March 19, 2019
12:20 pm
Vatox
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You can also watch the U.S. 2 year treasury for the same reason.
Currently 2.45% and the Fed at 2.5%.

98D4605B-380B-4DC7-9FC4-98C13B7FE859.png

A narrowing yield spread and inverse yield curves are bad news.

March 20, 2019
3:04 am
dealjunkie
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Bond yields can go up as fast as they went down

March 20, 2019
9:32 am
Vatox
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hotmony said
Bond yields can go up as fast as they went down  

Yes, but the trend represents the current market view and forecast. It will take substantial good news to disrupt the trend. Bring on the awesome good news and yes, bond yields will rise.

March 21, 2019
9:37 am
Vatox
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Dropping like an anchor. The 5 year bond now at 1.55%

March 21, 2019
9:56 am
Vatox
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U.S. 2 year treasury now at 2.4%

March 22, 2019
11:14 am
Vatox
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March 22, 2019
11:16 am
Vatox
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The 3 month yields more than the 10 year. That’s insane.

March 22, 2019
11:26 am
Vatox
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April 24, 2019
6:56 pm
dealjunkie
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I've disagreed with Vatox over bond yields on this forum he feels they matter very much in predicting the economic future I said less so. Today from the Bank of Canada this is what they said:

"As for those yield-curve red flags, the Bank of Canada says: don’t worry about them. Yields on fixed income are behaving differently than in the past, and this time, they are meaningless in terms of what they say about the strength of the economy."

April 24, 2019
7:30 pm
Vatox
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They don’t predict the economic future, they reflect investor sentiments. And positive investor sentiments are important for strong economic growth. The 5 year bond dropped today, most likely as a response to the rate hold. Unless inflation rears it’s ugly head, there won’t be any rate hike for quite a while and a rate drop could occur if that five year bond drops below 1.25%

April 24, 2019
9:11 pm
dealjunkie
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Whats the stock market predicting vatox like u say
"positive investor sentiments are important for strong economic growth."
Yields can turn on a dime

April 24, 2019
10:31 pm
Vatox
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I see the stock market as a bear rally with wishful thinkers and the blind eyed happy go lucky mentality of our current society. Nobody wants to believe bad times are coming and I don’t want it either, but I’m a realist. Of course the BoC is going to say ignore the bond yields, they aren’t going to come out and say the reckoning is coming and fuel the downward spiral.
I can’t believe that people actually think everything is in good order, they aren’t. We are in serious trouble. People need to wake up to the reality. Or maybe it’s not that they don’t see the problem but rather they just want to deny it in hopes of keeping the party going indefinitely. Mmmm.. get those VR goggles and plug in baby. It’s not real.

April 24, 2019
10:35 pm
Vatox
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If I’m so out to lunch, then why are all the banks dropping rates?
And why is inflation below target with rate holds since the end of October 2018?

April 25, 2019
7:31 am
dealjunkie
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A thing that will, not could, cause a bear bernie sanders start to lead in the polls over trump

May 10, 2019
8:43 pm
dealjunkie
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Big job number today and wages are up

Canada’s job numbers make history with biggest gain on record

Canada's economy adds 106,500 jobs, most in a month since 1976

U.S. is booming Canada in an election year a quarter point hike before year end is very possible

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