"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 August 2020 the "Real" Bank of Canada 10 Year Treasury Yield (the dotted blue plot, ie: the rate less CPI) ticked up above the negative Nirp-O-Nomic rate zone as CPI dropped back to 1% after April and May's negative prints at -02% and -0.4% respectively.
The cash real estate sector (TSX Real Estate Index - solid green plot) continued its downtrend after a head fake while the TSX Gold Index continued its crawl up the wall of worry.
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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