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Deutsche Bank: The Bank of Canada’s rate hike is coming to an end.









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发表于 2018-9-3 17:06:55 | 显示全部楼层 |阅读模式
The United States is being plagued by the potential upside down of the yield curve, and the northern neighbors are also suffering from the same illness.
Although the Bank of Canada (BOC) does not agree with this, Blackrock has another view.

BlackRock said that when the Canadian term structure becomes negative, Canadian banks will become increasingly reluctant to lend.

Although the Canadian yield curve is not as good as the US every time it predicts the recession, the hit rate is quite high.

According to the Organisation for Economic Co-operation and Development (OECD), since 1961, 10 out of 15 upside downs have seen at least one quarter of recession in the next 24 months.

BlackRock Canada's head of consolidation, Aubrey Basdeo, pointed out that the curve's continued flattering indicates that the Bank of Canada's rate hike cycle is coming to an end.

Canada's 2-year and 30-year government bond spreads fell to 13 basis points last week, the lowest level since 2007. The 10-year and 30-year curves fell below zero last week, and in May the spread was reversed for the first time in more than a decade.

The Bank of Canada has raised interest rates four times since the middle of last year. The expectation of further tightening makes the Canadian dollar the second best performer against the US dollar in the G10 currency.

Despite this, Basde warned that the trend of the curve indicates that the Bank of Canada did not take all factors into account.


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