At our annual conference this week, John Bordignon, EVP of Strategic Development with Paradigm Quest, gave an extremely informative presentation on bond yields and interest rates. Here are the main points he shared:
· Expect to see 12-18 months of yo-yo markets (the TSX, Dow, and subsequently, the Bond Market) in which we will see surges and retreats (as we have seen over the past month)
· The US will take longer to recover than initial estimates
· The economies to watch as the fastest growing nations are from BRIC (Brazil, Russia, India, and China)
· Rates will stay relatively low as bonds continue to rise
· “Quantitative Easing” or the printing of Government Bonds and T-bills (aka money) will be watched very closely to monitor the effects of this practice on inflation
· The other main factors affecting the economy (and in turn rates) are:
o Oil prices
o Bond prices/yields
o Large market influences (such as GM going bankrupt)
o And the jobless numbers, the actual number of Canadians out of work
· Here are today’s numbers. The 5 year bond yield was up 0.03 to 2.58%. Four weeks ago, it was exactly the same. The spread today between the 5 year bond yield and the Merix 5 year fixed rate is 1.91%.
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· TSX +204.21 (Reuters)
· DOW -23.05
· Dollar -.19c to 86.77USD
· Oil -$.57 to $68.67US per barrel
· Gold +$10.20 to $934.10USD per ounce
· Canadian 5 yr bond yields +.03bps to 2.58- Four weeks ago it was 2.58. The spread, based on 5 yr rate of 4.49%, is at 1.91%.
· http://www.financialpost.com/markets/market-data/money-yields-can_us.html?tmp=yields-can_us
The yield, rate of return on your bond, can be read through a yield curve, which is the pattern of yields on bonds. This increase in bond yield is something to watch. If the bond yield continues to go up, the spread will continue to shrink and this could be a trigger for interest rates to rise. Ideally lenders are looking for a spread between 1.70 and 1.80
An interesting $ fact from this week: On the threat of a summer strike, LCBO sold $60m worth of alcohol Tuesday. The highest one day sale ever.
Here are a few of my favorite past articles from my Lethbridge real estate and mortgage blog you might have missed or wish to recommend them to a friend.
WANTED: Single Women: - Single women are a hot mortgage market
Common Financial Problems - Avoid these financial mistakes
Get Your Credit Score UP - Invaluable insight into your credit score
Mortgage Guidelines Get Tighter - Harder and harder to borrow money
Is Your Mortgage Company Out of Business in 2009? - What to do when your bank goes broke
What is wrong with MLS - Is your info being abused?
Survivor - Real Estate Edition - Let's vote a few more off the island
Robert May is a Realtor, as well as the broker and owner of Rainbow Realty of Lethbridge Alberta . He is also a licensed Lethbridge mortgage broker and financing expert with Canada First Mortgage of Calgary Alberta. He has been in the Lethbridge real estate industry since 1993 and offers full MLS real estate services to Lethbridge and surrounding area, as well as Lethbridge mortgage financing, mortgage refinancing , preapprovals, and Lethbridge heloc financing to Lethbridge and Southern Alberta. He can be found online at this link: mortgage broker Lethbridge
Let me share my 15 years experience in the local Lethbridge real estate and financing market with you! It is the first step towards making a profitable real estate decision.
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