REAL LONG INTEREST RATE The Bank of Canada 30 year Bond Rate less CPI and the TSX Real Estate Index

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Real Rates of return fall with the rise in CPI or the drop in nominal yields and are defined as "the nominal rate less CPI".
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The chart above shows that in April 2018, the real long interest rate (plum plot line) ticked up above zero return as CPI spiked again above the Bank of Canada 2% target. But after 9.2 years of ZIRP and NIRP total CPI is still in a long term downtrend.​​ And the real long rate troughs are happening closer together since the TSX real estate breakout in 1Q 2015.
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Total CPI is now at 2.3%; in the last 41 prints, 2.0% was hit 3 times, 2.1% was hit twice, last month it hit 2.2% and now it's 2.3%.​

​The June 2017 TSX real estate spike high (green dotted plot) has given way, failing to remain above resistance begun in 1Q 2015.
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Commodity deflation reflects withering global GDP. The recent "strength" in the Canadian dollar has helped importers and consumers but exporters don't like it. One should keep an eye on the USD/CAD pair because since February 2018 the USD has been trending stronger and as it does Canadian consumers will need to find or borrow more loons, to maintain lifestyle. 

The slow down in real estate sales as well as perhaps a more secular turn in trend may leave the June 2017 TSX Real Estate Index data spike high and dry as investors rethink their 2018 portfolio mix. 

Mark your calendars, 2016-17 has been hot for real estate bulls and they have been able to make 2017 memorable despite sales resistance under the growing mountain of debt.

​That debt is now under the influence of rising nominal rates.​
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