Bond Yields Lowest Since April

mortgage-rates-low Bank of Canada Governor David Longworth thinks Canada’s economy will be weaker than expected. He also thinks inflation will be tamer than expected.  What a nice combination for interest rates. 

It looks like economists’ see-sawing interest rate speculations are now tilting towards rate cuts.  (Keep in mind this can change in a heartbeat.) 

5-year bond yields fell to 3.03% yesterday, their lowest close in over 19 weeks.  That, of course, is good news for fixed-rate mortgage shoppers.  Now we await Friday’s GDP report, which could spike yields higher or take them below the key 3% support level.

In the meantime, here’s what Bay Street has to say:

  • Bloomberg’s survey of major economists has 13 of 13 predicting the Bank of Canada will leave rates unchanged when they meet next on September 3.
  • Scotia Capital’s Derek Holt:  Predicts a 1/2% rate cut by year-end
  • Laurentian’s Carlos Leitao: “I think in Canada, if we’re not in recession, we’re mighty close to it.”
  • Merrill Lynch’s David Wolf:  Expects a 1/4% rate cut in both December and January
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