We tend to look at the Bank of Canada’s regular posting of its benchmark rate to get a feel for where interest rates are headed. But there’s another metric worthy of some attention: that’s long-term bond rates. And they are eye-catching these days, especially in the US.
The 30-year US government bond rate is sitting north of 5-percent this month. That’s the highest it’s been since the financial crisis back in 2008. And it might be a signal that Donald Trump is having trouble financing his war – he’s having to pay a premium to borrow on global markets.
Here in Canada comparable long-term rates are more favorable – around 3.7% which is at the high end of the range we’ve experienced since the banking crisis in 2008 but still considerably lower than the American rates.
The reason we track this is simple: mortgage rates work off bond yields and these figures suggest the likelihood of lower interest rates for home buyers is waning and central banks will continue to feel pressure to raise variable rates as inflation just won’t go away.
