Canada’s 5-year bond soared on Monday. In turn, its yield plummeted a stunning 27 basis points (0.27%). Bonds yields haven’t had a one-day plunge that big in over 10 years (as far back as the Bank of Canada has public data).
The powerful move was prompted, of course, by the Lehman bankruptcy in the U.S., Merrill Lynch’s surprise takeover (savior), and AIG’s enormous liquidity crisis. Traders ran for cover in the safest securities available, Canadian and U.S. treasuries.
BMO economist Sherry Cooper says this financial crisis is “the worst” she’s ever seen. It will therefore be interesting to see how things play out in Canada’s mortgage market this week. Usually, big dips in bond yields are good for mortgage rates, but we’ll have to wait and see where all the dust settles.
Data source: Bank of Canada
Last modified: April 25, 2014
i applied for a mortgage this week after agreeing on an offer for a home. Does this mean good news for me with regards to rate?
The last time the 5-year GoC bond fell by more was on Oct 31/05 (32 bps). Since 1990 there have been only 9 days that the 5-year GoC bond has fallen by 28 bps or more. Most of them were in the early 90s.
Jim
Should have been Oct 31/95 not Oct 31/05.
Jim
Wow. Thanks Jim!
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Thanks Julie!