Where are rates headed?

05 Jan

With most forecasters predicting a difficult year globally, demand for high-grade government bonds remains very high. Most of the macro factors that steered rates in 2011 will continue to drive rates in 2012: the ongoing European fiscal crisis, the US political process (election year), and the rate of growth in the developing world will all play a key part in taking interest rates in Canada higher or lower.

Also important for 2012 will be the liquidity in the market that influences the spreads at which mortgage rates are offered relative to government bond yields. This spread started to increase in late 2011 as investors demonstrated a preference for government bonds over alternative fixed income opportunities.

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Posted by on January 5, 2012 in Uncategorized


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