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 10yr Rate, the Interest Rate Spread and the Canadian Yield Curve
In April 2019 the 10yr less 2yr spread (purple dotted plot line) ticked up 8 bps to 16 beeps away from inversion.
In February 2007 it was 6 bps away from inversion which occurred three months later in May 2007.
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) spikes up to test its attempt to break out six months ago.
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