NOPE to NIRP
Sal Guatieri, Senior Economist at BMO Capital Markets Economic Research released their North American Outlook (Nov 13, 2013) which included a forecast for an inflation pickup and an interest rate move up on 10 year Treasury Bonds.
My chart on the Canadian 10 Year "Real" Treasury Bond Yield indeed looks like it is in an up trend but a lot of that is from deflation, a dropping CPI. This real rate has climbed 226 bps December 2011 through October 2013.
If a major bank research group is getting ready for the beginning of the end of ZIRP, then forget about NIRP (Negative Interest Rate Policy) which has been trial ballooned on both sides of the Atlantic lately.
Here are a few odd bullet point quotes from the BMO report that makes me wonder if BMO is actually going to sell Treasuries (price down, yield up) or if they are in the market to buy a dip:
I think the metrics to watch to determine whether interest rates rise or not in the next 12 months will be unemployment, labour participation and household earnings. If earnings rise so will aggregate demand and general price inflation; but in both Canada and the U.S. politicians argue that government deficit spending must be reduced. If the government is not spending (investing) into the economy, will the private sector pick up the slack?
History, Charts & Curated Readings
"Progress, far from consisting in change, depends on retentiveness. When change is absolute there remains no being to improve and no direction is set for possible improvement; and when experience is not retained, as among savages, infancy is perpetual. Those who cannot remember the past are condemned to repeat it." George Santayana Vol. I, Reason in Common Sense
"History, real solemn history, I cannot be interested in.... I read it a little as a duty; but it tells me nothing that does not either vex or weary me. The quarrels of popes and kings, with wars and pestilences in every page; the men all so good for nothing, and hardly any women at all - it is very tiresome." Jane Austen spoken by Catherine Morland in 'Northanger Abbey'