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 June 2019 the 10yr less 2yr spread (purple dotted plot line) again came in at only 4 beeps from inversion.
In November 2006 it was 4 bps away from inversion and six months later in May 2007, the metric inverted.
Yield inversion on the pair looks possible but perhaps actual inversion is no longer necessary for a recession threat. Time will tell but the signs are there for a trend change as the TSX Real Estate Index Y/Y momentum (green plot) pulls back its most recent attempt to break out.
In May, June and July of 2007 the 10-2yr spread was negative 10 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 of Canada’s latest senior loan officer survey found that, while business lending conditions had eased, approval rates for Canadian corporate borrowers were lower in the fourth quarter of 2018, “because some respondents appear to be less willing to undertake deals with looser terms and conditions.” Financial Post, January 4, 2019