Quote:
Originally Posted by 4444
if it's the former, interest rates will go up as justin issues billions more of government debt (decreasing canada's credit strength, i.e. requiring higher rates on gov. debt as investors become less sure of canada's economic strength and ability to repay) resulting in the end of cheap debt and potentially job losses in the private sector, if it's the latter, then the sky's the limit and we should all buy, buy, buy, and learn mandarin!
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Well more and more I'm thinking we will see a lengthy period of low interest rates, I think low rates will become the new "standard rate".
Financially the world is in a strange position, bonds yields are still exceptionally low across the G7 countries - meanwhile equity markets are at all time highs. What happens if/when the stock market has another major mishap? With investors fleeing equities for the security of bonds once again, where can we expect bond yields to go? Down obviously, though I'm not discounting the obvious size difference between equity and bond markets.
Canada is well positioned to maintain low interest rates for an extended period of time given our debt to GDP, bureaucrats could muck things up for another decade before we start to see it impact our bond yields. Barring a situation where the global economy takes off and Canada gets left behind.. but that seems unlikely given the slow down being seen in the emerging markets which have been the major driver of the global economy over the last 30+ years.
I dunno, it's a matter of opinion I suppose, but I wouldn't be nearly as hesitant signing up for a 5 year mortgage today than I would have been in 2010. I expect rates to stay low for a very very long time. (If we surpass a 2% overnight lending rate from the BOC by 2020 I'll be shocked.)
Shit's cray.