- Bond yield volatility surges through the Fall.
- The Canadian economy may be starting its descent into a recession.
- A Bank of Canada pivot in 2023?
Mortgage Rate Outlook
The relative calm in the mortgage markets contrasts with the unprecedented volatility in the bond market. From just the second half of October to early November, Canadian bond yields experienced three of the top 25 most significant daily moves over the past 20 years. Indeed, the bond market seems to be evaluating and re-evaluating the Bank of Canada’s overnight rate path with each data release and announcement. Interestingly, even with the still persistently high Canadian inflation in October, bond yields have fallen and are now at levels last seen in early October.
Despite the decline in bond yields from where they peaked in early October, we have not seen an adjustment to five-year fixed rates as lenders wait for a clear signal on the direction of their funding costs. If five-year bond yields...