CANADIAN YIELD CURVE Bank of Canada Bank Rate, 2yr, 10yr, 10yr less 2yr, 30yr, and 5yr Fixed Rate Mortgage and the TSX Real Estate Y/Y Momentum. See also the Real Long Rates and the Real 10yr Rate and the Interest Rate Spread
In October 2019 the 10yr less 2yr spread (purple dotted plot line) remains inverted for the fourth consecutive month with an 11 beep negative print.
In November 2006 it was 4 bps away from inversion and six months later in May, June and July 2007, the metric inverted and widened to negative 11 beeps and the TSX Real Estate Index tipped over into plunge-ville.
Back then the bank rate was 4.5% and about to briefly foray into 4.8% territory until the BoC freaked and began heading towards zirpiness. The bank rate now is 2%.
After 10.7 years of ZIRP and NIRP, it about time for global governments to start replacing monetary policy with fiscal policy. I don't think our social well being should be in the hands of knob twiddlers.
We know that yield inversion is not always a precursor to recession threat, but the signs are there for a trend change as the TSX Real Estate Index Y/Y momentum (green plot) continues printing higher highs since late 2017.