bonds loonie Macro Tourist

Macro Tourist, Alleged Canadian, Is ‘Getting More Bearish On Canada Every Day’

"I'm bearish. Bigly."

Read more from The Macro Tourist I am getting more bearish on Canada every day.  And it's more than the fact that we must be suffering from hockey-hyperinflation if sticks now cost $300 each. Over the next few weeks I plan to sketch out all the reasons I am negative on Canada's economy, but today I would like to focus on the signal the bond market is sending. Before I do, I would like to take a moment to stress that although I am bearish on Canadian financial assets, that doesn't mean that I am a self-loathing Canadian.  I am in fact a loyal Canadian who wears a toque and pronounces it Zed, not Zee. It often frustrates me how people interpret market calls as reflections of a market pundit's views of that country or people.  For example, I believe US stocks are priced for perfection relative to the rest of the world and don't represent a favourable long-term risk-reward opportunity.  Does that mean I am judging America's economy or people?  Not even for a moment.  I am simply calculating what I believe the market has priced in, and then evaluating those expectations versus what I believe to be the actual odds of that outcome occurring.  Too often this nuance is lost.  
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1 comment on “Macro Tourist, Alleged Canadian, Is ‘Getting More Bearish On Canada Every Day’

  1. Is there any data on the predictive power of the Canadian yield curve when it’s uncorrelated with the US curve? For example, is there any example of an inversion in the Canadian curve correctly anticipating a recession in Canada without a similar inversion/recession in the US?
    My interpretation of the present situation is that the BoC has not followed the US Fed in lowering rates at the short end, because it’s not warranted here, while at the long end, Canadian bonds are viewed as safer and hence yield less.

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