Happy Monday Morning! The Scotia guy was right, and the Bank of Canada delivered with another rate hike. It was only 25bps but the signal sent shockwaves through the bond market. It’s incredibly rare for a central bank to raise rates, pause, and then start hiking again. Pauses are almost always met with inevitable rate cuts. This is unprecedented territory. This is already the largest cumulative rate hiking cycle since the 1980’s.
Tug of war. Hmm. boc has purchased about 90% of government treasuries (bonds) since 2019. What was the interest on bonds 2019 to 2021. Much lower than now. Likely less than 1%. What are these treasuries worth now? Of course the “paper” value of these bonds doesn’t reflect real value until they are sold. Raising interest rates is a race to the bottom of the BOC balance sheet as the historical purchases need to be heavily discounted.
CANADA IS AN OVERPRICED GONGSHOW, FARMLAND IS CHEAP IN THE USA
BUY 20-50 USA HOMES ON THEIR OWN LOTS FOR LESS THAN A MILLION DOLLARS
SEE ZILLOW AND REDFIN
“One third of households have not seen an increase in their monthly mortgage payment, but it’s coming.”
1/3 or 2/3? (I thought 1/3 HAVE seen an a increase)
only 1/3 have a payment increase
Thanks
Tug of war. Hmm. boc has purchased about 90% of government treasuries (bonds) since 2019. What was the interest on bonds 2019 to 2021. Much lower than now. Likely less than 1%. What are these treasuries worth now? Of course the “paper” value of these bonds doesn’t reflect real value until they are sold. Raising interest rates is a race to the bottom of the BOC balance sheet as the historical purchases need to be heavily discounted.