The BoC hike is important.
Poloz is effectively being used as a guinea pig by DM central bankers to see what happens when you hike rates in the post-crisis era.
And if you’re a market watcher in the U.S. or Europe, you should take note of what the TSX did as soon as the decision came down. Have a look:
That’s not a huge move, but it does underscore the notion that equity strength is a function of central bank largesse and it’s a preview of what could very well happen to European shares in the event the ECB comes across as hawkish or otherwise doesn’t do enough to talk the euro down tomorrow.
Meanwhile, the yield on Canada’s 2Y bonds is flying:
So consider this a preview of what may (or may not) be coming in Europe and the U.S.
Oh, and don’t forget to ask yourself what’s to become of Canada’s housing bubble if the BoC keeps hiking.