Bond yields have fallen to US tariffs for nearly 3 years, and have paved the way for fixed interest rates
The market’s response to the news is that the threat of the United States follows 25 % of tariffs on most Canadian goods, while oil and natural gas are 10 %, which is the largest trade shock in Canada since the 1930s.
The Canadian government’s 5 -year bond yield fell to 2.55 %, the lowest level since June 2022, and then slightly bombed at 2.63 % at noon on Monday.
TMG’s Rate-Watcher Ryan Sims pointed out: “It seems that everyone is getting lower bond yields.
Several lenders began to reduce interest rates on weekends, and some of them reduced 25 basis points (0.25 %). Ron Butler, an expert in the Pattler mortgage loan, told Canada mortgage loan trend He is expected to further reduce, the insurance rate will drop by 20-25 basis points, and the conventional interest rate will decrease up to 30 basis points.
Although there are already a small number of insurance rates below 4.00 %, Butler is expected to have more this week.
He posted on social media: “If you fall, this means that almost all fixed interest rates begin this weekend.”
However, he warned that all this is at present, because it has not been told how long the tariffs will stay. He added: “The highest possibility is that from now on, all fixed interest rates will be forced to withdraw after a few months of inflation.”
The rate of reducing economic uncertainty driven
The sharp decline in bond yields reflects investors’ concerns that the new tariffs will slow trade, weaken growth and increase the opportunities for banks to reduce banks.
A report from the Royal Royal Bank Economics (RBC Economics) says that the continuous tariffs in Canada’s scope is economic recession, which may increase the current unemployment rate by 6.7 %, an increase of 2 to 3 percentage points.
The report pointed out: “If we continue, our preliminary analysis shows that this scale tariff (based on many assumptions) can eliminate Canada’s growth for three years, the most impact in the first and second year.”
The Royal Bank of Canada pointed out that retaliatory measures announced in Canada-tariffs on $ 155 billion in US goods are 25 %. Although it is targeted at the US economy, it is expected to slow down and promote the inflation of target products.
The Bank of Canada estimates in its latest monetary policy report that if all imported tariffs still exist, the growth rate of GDP will be reduced by 2.4 percentage points in the first year, while the next year will decrease by 1.5 percentage points.
A report from TD Economics states: “Our calculation shows that if these tariffs lasted for 5 to 6 months, it will officially cause the domestic economy to decline, although it was a relatively shallow economic recession at that time.” “Further duration of duration Naturally deepen contraction. “
Last week, Tiff Macklem, the governor of the Bank of Canada, warned that tariffs could impose pressure on inflation.
After his policy announcement last week, he said: “The lasting and extensive trade conflict will seriously damage the economic activities of Canada.” “At the same time, the higher cost of imported goods will apply directly to the inflation and pressure.”
However, Charles ST-Marnaud, chief economist in central Alberta Province, pointed out that BOC is expected to “tend to provide support for the economy.”
He wrote in a research report: “We believe that BOC will believe that the inflation effect of tariffs is mainly short -lived, because this is a one -time rise, not the price continues to rise.” “This means that unless shock is shocked Inflation expectations or change the pricing behavior of the enterprise, otherwise it will only temporarily increase the inflation rate. “
As a result, it can be seen that the Bank of Canada provides additional reduction and reduction throughout the year.
BMO now sees that each meeting of the bank this year will reduce the interest rate of a quarter, and the national bank said that there is a reasons for the reduction of the “emergency” meeting rate.
Economist Stéfanemarion wrote: “Please note that emergency operations will reduce at least 50 basis points.” “In addition to recent meeting cases, the March and April meetings are scheduled to be scheduled (each time Twenty -25 basis points) quickly reduced policy target interest rates to 2 % in spring
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5 years of bond yield bond returns Charles St. Arnold’s fixed mortgage loan interest rate fixed mortgage loan interest rate has declined, Ron Bartler Ryan Stephen Marien Tariff
Last modification: February 3, 2025
