"If, as The Bank of Canada expects, supply is restored more quickly than demand, this could lead to a large gap between the two, putting a lot of downward pressure on inflation. Our main concern is to avoid a persistent drop in inflation by helping Canadians get back to work." June 22, 2020, Governor Tiff Macklem
REAL 10 YEAR INTEREST RATE Bank of Canada 10 year Bond less CPI; also the TSX Real Estate, Energy and Gold Indexes. See also the Real Long Rate and the Interest Rate Spread and the Canadian Yield Curve
CLICK CHART TO ENLARGE
The chart above shows that in January 2021, the "Real" Bank of Canada 10 Year Treasury Yield (the dotted blue plot, ie: the rate less CPI) remained in the negative Nirp-O-Nomic rate zone even as CPI ticked down from 1% to 0.7% (1 month reporting lag) and after April and May's negative prints at -02% and -0.4%.
The cash real estate sector (TSX Real Estate Index - solid green plot) caught weak bids while the TSX Gold Index remained well below the 2020 and 2011 highs.
The novel corona virus pandemic and global currency turmoil as well as trade and war unknowns are coloring both sides of the debate on the ultimate direction of gold, interest rates and the USD.
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The 10 year bond yield is a bench mark for real estate mortgage rates. I have used it in my Vancouver Condo Case Study to measure risk against the buy and hold argument. |
Compare 2006-2008 to 2015-2017
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