The chart above shows the 10 Year Less the 2 Year Canadian Bond Yield Curve (dotted yellow line) as well as the 1 month, 2 year, 10 year and 30 year Bank of Canada treasury yields and the retail 5 Year Fixed Mortgage Rate. In the spring and summer of 2004 the 10's less 2's renewed its trend to narrowing as the demand for speculative short term money ballooned and the curve set off on a path towards inversion igniting along the way a 3-4 year buying spree of over-leveraged assets, (commodities, real estate, junk bonds). In the Spring of 2007 the 10yr less the 2yr went negative and the party continued except in Alberta where nominal prices peaked and were never seen again despite the giddy speculation in the rest of metro Canada. In the spring of 2008, the curve shot up as short administered rates plummeted against firming long rates but the party kept right on going. In January 2012 the BoC continued to hold steady at 1.25% as did mortgage lenders keeping their 5yr fixed rate mortgage at 5.29% just above the record low rate last seen Sept 2010 and Jan 2011. Notice the falling curve of the 10yr less the 2yr rate (yellow dashed); it's slumped below the BoC rate. Is this a prediction of another negative spread (see July 2007 on the chart) that will fuel another mad speculative fury in real estate (see Vancouver's Madness) and or commodity prices? Or has the party stopped and this is just a reflection of the government imposed "tax" on savers? I have added the "real" rate on the long bond (Interest Rate Chart) which ticked up positive (with a falling CPI) as the whole treasury curve ticked up this month. Too soon to call a trend change, but boardrooms full of mortgage lenders are looking at this as well.