Consider This A Preview: Don’t Ignore Canada’s Rate Hike

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:

Canads

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:

Canada2

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.

 

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One thought on “Consider This A Preview: Don’t Ignore Canada’s Rate Hike

  1. i got a question.
    are the various markets ratcheting down slowly?
    first usa then eau then asia then to come euro area?
    maybe it just me–hmmm
    could it be the perception of rates going up and the a coordinated effort by CB’s?
    great improvements on your web site–impressive!
    sb

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