Bond market talk? 'Zzzzz,' some might be thinking.
With the stock market having done well this year, the market is turning its attention on interest rates. More significantly, Prime Minister Harper himself stated flatly that Canadians should expect interest rates to rise.
In a year-end interview with CTV, Harper said that while he's optimistic that 2010 will be a year of economic recovery, Canadian families should be prepared for higher credit charges. Source: http://www.cfra.com/?cat=3&nid=70157
In Toronto, real estate is thought to be in another bubble. Given a confluence events, average real estate prices have risen. The events are: very low mortgage rates, lower supply in homes, and steady month-to-month rate of unemployment. If the Toronto land transfer tax is an indication of history repeating itself, the HST (harmonized sales tax), when it is implemented in July, may act as another driver for higher demand for homes.
In the United States, treasury yields are on the move. It is too early to make any assessment here, due to low trading volumes. January will be a time to re-visit the yield for U.S. Treasury bonds.
The analysis and speculation for interest rates is not surprising at this time. Investors will need to navigate past this noise. What will matter is what phase in the credit cycle the market is in, and what the government actions will take place in the coming months to complement the loose or tight credit conditions.
Disclosure: A tightening monetary policy will require a re-analysis on my growth holdings in my Investing IQ App, powered by kaChing.
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