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  • Jul 22nd, 2018 9:26 am
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Sr. Member
Oct 21, 2014
884 posts
652 upvotes
Burlington, ON
pkrash wrote:
Jun 12th, 2018 2:40 pm
There is no trade war.
Rates go higher.
Trump has already said Canadian's will be "punished" because he don't like Trudeau. We need to drop rates now in order to counteract the coming tariffs.
Deal Addict
Jun 3, 2009
4168 posts
554 upvotes
Montreal
CollegeGraduate wrote:
Jun 11th, 2018 11:39 pm
Trump is easy to convince. We are going to have a U-turn within a second.
China handed out 500M loans like candies to bribe Trump but will we be able to do the same? Money talks period.

I think of odds of Poloz raising it in July just went from 90% to 50%. We just got a variable rate mortgage so I hope Trump keeps playing hardball with Canada and Mexico as long as possible.
Newbie
Apr 7, 2018
7 posts
2 upvotes
GalvToronto wrote:
Jun 12th, 2018 2:36 pm
Man, you completely misunderstand how fiscal policy works.
LMAO. Do you even know what fiscal policy is? Fiscal policy is government tax/spending. I think you mean Monetary policy which is interest rates/money supply. Econ 101, chapter 1, page 1.
Deal Addict
Feb 23, 2009
1280 posts
1164 upvotes
Oshawa
Gungnir wrote:
Jun 12th, 2018 7:49 pm
Trump has already said Canadian's will be "punished" because he don't like Trudeau. We need to drop rates now in order to counteract the coming tariffs.
Rates are not going down.
Deal with it.
Deal Expert
User avatar
Apr 21, 2004
44758 posts
11507 upvotes
BoC probably not going to follow US Fed's 4 more rate hikes in 2018.

Too much risks, best to take a slow and steady approach.
Deal Addict
Feb 23, 2009
1280 posts
1164 upvotes
Oshawa
Hey...look at that...the Fed raised rates.
Ooooops!
Deal Addict
Aug 19, 2016
1593 posts
591 upvotes
Man, the mortgage is going to be more expensive. And the mortgage interest rate follows the US Treasury rate, BoC over night lending rate.
Deal Addict
Feb 23, 2009
1280 posts
1164 upvotes
Oshawa
alanbrenton wrote:
Jun 13th, 2018 2:17 pm
BoC probably not going to follow US Fed's 4 more rate hikes in 2018.

Too much risks, best to take a slow and steady approach.
The Fed has not said there will be "4 more rate hikes in 2018".
There will be 4 in total.
Sr. Member
Jul 3, 2007
858 posts
1014 upvotes
alanbrenton wrote:
Jun 13th, 2018 2:17 pm
BoC probably not going to follow US Fed's 4 more rate hikes in 2018.

Too much risks, best to take a slow and steady approach.
not if inflation gets in the way.....then the hikes will be one after another
Member
Feb 13, 2018
243 posts
214 upvotes
BoC won't hike rates as quick as US, they just can't simply because Canadian just carry too much household debt. House rich, cash flow -ve. Another 20% drop in house price will trigger massive foreclosure, another 15% will hit many with HELOC drawn out. I think we will see that in next 2 to 3 years.
Penalty Box
User avatar
Jan 6, 2011
4335 posts
742 upvotes
GTA
rfdchan wrote:
Jun 13th, 2018 8:43 pm
BoC won't hike rates as quick as US, they just can't simply because Canadian just carry too much household debt. House rich, cash flow -ve. Another 20% drop in house price will trigger massive foreclosure, another 15% will hit many with HELOC drawn out. I think we will see that in next 2 to 3 years.
That has been true in the past, when individual countries are playing with the flood lever, and when public debts are paid down and housing prices collapsed i.e. monetary deflation.

Now all central banks printed to support their own govts levered to the hilt. And all govts are transferring public leverages to corporations and private households. If they stop now, the whole system collapses.

We are witnessing world history, but it shouldn't be the first time.
Deal Addict
Dec 27, 2006
1647 posts
688 upvotes
https://www.theglobeandmail.com/investi ... yone-else/

Gundlach sees 6% yield in 3 years. Anyone else?:
Published 10 hours ago
Jeffrey Gundlach has had a good run this year handicapping the $14.9 trillion Treasury market.

DoubleLine Capital’s chief investment officer said in January that the benchmark 10-year U.S. yield would keep rising if it broke past the 2017 high of 2.63 per cent. It did. In April, just as the yield reached 3 percent for the first time since 2014, Gundlach said he had “low conviction” that it would sustain that level. Sure enough, it has closed below that threshold for 15 consecutive sessions.

And he’s repeatedly said the 30-year U.S. yield would need to breach 3.22 per cent - and not just once, but twice - for long bonds to enter a bear market. Almost to the decimal point, that call has panned out, with the yield settling in below that key mark.

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So it’s eye-catching, then, that Gundlach reiterated in a webcast on Tuesday his call that the 10-year Treasury yield would rise to 6 per cent by 2020 or 2021. “We’re right on track” for that, he said. As a reminder, that would be the highest yield since 2000.

His reasoning is fairly straightforward. The combination of rising U.S. interest rates and fiscal deficits is like a “suicide mission,” he said in the webcast, escalating the intensity from last month, when he referred to the trend as a “pretty dangerous cocktail.” Ultimately, the debt burden will rise to such a level that borrowing costs will surge, in his estimation. That hasn’t happened yet because ultra-low German yields are capping how much Treasuries can sell off.

But Gundlach also said a recession is possible by 2020, which could make the next presidential election “a wild ride.” Usually, interest rates tend to fall during economic slowdowns as the Federal Reserve shifts to accommodative monetary policy.

In one of his recent webcasts, Gundlach referenced Lacy Hunt, the well-known bond bull at Hoisington Investment Management. As he has said in many of his quarterly publications, yields are destined to fall, rather than rise, because of the global sovereign-debt overhang. The Fed will have to stop raising rates and start cutting them and probably resume its quantitative easing program for good measure.

“I believe that we’re closer to the peak - or at the peak - at the longer end of the market,” Hunt said in a phone interview. “You come in and undertake a massive increase in debt, and the economy gets a transitory boost in economic activity. The consumer has already spent a lot of the tax cut, but the debt lingers.”

Rock-bottom interest rates, essentially, are the only way the U.S. can afford to pay what it owes. Just look at Japan, where the debt-to-GDP ratio has exceeded 200 per cent for years and its 10-year yield is controlled to stay near zero.

Now, most strategists and economists don’t see that sort of scenario playing out anytime soon. In fact, the consensus agrees with Gundlach that Treasury yields are headed higher. But the median forecast among 28 analysts surveyed by Bloomberg this month is for the U.S. 10-year yield to rise to just 3.5 per cent by this time in 2020 from 2.95 percent now.

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Even the most ambitious forecasts don’t go as far as Gundlach. John Dunham at Guerrilla Economics in Brooklyn expects the 10-year yield to reach 4.63 per cent in two years. Tom Fullerton, a professor at the University of Texas at El Paso, forecasts 4.6 per cent.

Gundlach made some important points about the societal cost of running up budget deficits to largely finance tax cuts. Namely, that it’s putting the U.S. way behind in taking care of its aging infrastructure. And perhaps his Treasuries call came from a similar place - concern about the country’s fiscal position. Borrowing costs soaring to that extent would surely catch the attention of Tea Party Republicans in Congress, who pushed the U.S. to the brink during the 2011 debt-ceiling crisis.

Based on the current market dynamics, however, Gundlach is unlikely to find much company for his 6 percent call. Global central banks are stepping back from stimulus at a glacial pace, and that’s reflected in the still-low level of sovereign-debt yields. Something, somewhere would have to snap.

Then we’d all be in for a wild ride, indeed.
Deal Expert
User avatar
Apr 21, 2004
44758 posts
11507 upvotes
So this partially explains the weakness in the Loonie. :) Let's go BoC rate hike bulls!!! Yep Yep Yurray!

Odds of a July rate hike are dropping — and the loonie is taking the hit
Canadian dollar weakens to almost year low as traders bet Bank of Canada will turn dovish amid escalating trade tensions
http://business.financialpost.com/news/ ... ok-worsens
Sr. Member
Mar 20, 2017
630 posts
476 upvotes
Arkaine wrote:
May 30th, 2018 6:50 pm
Rates will go up in July.
July and then either September or December
pkrash wrote:
Jun 11th, 2018 7:15 pm
There is no trade war.
Stop spreading false information.
Rates are going higher.
GalvToronto wrote:
May 31st, 2018 10:54 am
CAD has been hammered by steel/aluminium tariffs few hours ago. The probability of July rate hike decreased.
Time always shows eventually who was a clown and who was not.
https://www.bloomberg.com/news/articles ... sales-drop
Canada’s economy showed unexpected weakness in the second quarter, recording sluggish readings for both inflation and retail sales that have dampened the outlook for Bank of Canada rate hikes.


.....


Swaps trading suggests a 54 percent probability of a hike at the Bank of Canada’s next rate decision on July 11, down from about two-thirds earlier in the day. A hike isn’t fully priced in until October, with chances of a second hike by December below 50 percent.

As recently as last month, more than two more rate hikes had been priced in this year, adding to the three increases the Bank of Canada has already taken.

When I was saying 80% probability is overestimated by market, clowns didn't believe me. Now market adjusted expectations to my words.
Some clowns even predicted 2-3 hikes in 2018. Market farted on their forecasts.
Now I am saying even 54% probability is too high. It is 25-30% at very best.
Penalty Box
User avatar
Jan 6, 2011
4335 posts
742 upvotes
GTA
alanbrenton wrote:
Jun 21st, 2018 9:57 am
So this partially explains the weakness in the Loonie. :) Let's go BoC rate hike bulls!!! Yep Yep Yurray!

Odds of a July rate hike are dropping — and the loonie is taking the hit
Canadian dollar weakens to almost year low as traders bet Bank of Canada will turn dovish amid escalating trade tensions
http://business.financialpost.com/news/ ... ok-worsens
It's un-hikable. You are asking a men with one leg amputated below knee to slam dunk.

Wait until Trumper print and put money in people's pocket, CAD will surge, inflation jumps and your savings shrink.

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