Economy 52,889 Posted January 17, 2016 Share Posted January 17, 2016 http://www.financialpost.com/m/index.html Due to low resource prices (especially oil) Canadian investors are going conservative and investing into bonds as they avoid equities Unlike Venezuela, Russia, Iran or other Oil Dependant Nations, Canada is deversified enough that low oil prices will only slow down the economy but not collapse it or cause defaults causing a perfect goldilocks for bond sales to surge because caution attracts safe investments like bond sales but too much caution hinders any investment Because Canadas debt to GDP Ratio is only 30%, the bond market is too small for demand and the Central Bank lowering rates makes investors rush in bond purchases to lock in rates before they drop further The result is that 2 year bonds have now fallen to 0.2% (even lower than Japans) and 10 year bonds have fallen to 1%. With inflation at 1.5% in real value, Canada is getting payed for the debt it owns Some mortgages may soon fall below 2% as a result. Link to post Share on other sites More sharing options...
Seeka 12,372 Posted January 17, 2016 Share Posted January 17, 2016 That sounds like a good thing. Canada seems like it has all its sh!t together. Unlike... a certain country in which a petulant child is running for President. Link to post Share on other sites More sharing options...
Economy 52,889 Posted January 17, 2016 Author Share Posted January 17, 2016 12 minutes ago, Seeka said: That sounds like a good thing. Canada seems like it has all its sh!t together. Unlike... a certain country in which a petulant child is running for President. Some factors causing this are good like low debt, good history of not defaulting, political stability etc But part of the reason rates are so low is also because the economy is sluggish due to low comodity prices and so investors in Canada are seeking safety of bonds An economy in crisis mode will have high rates cause investors fear lending to their own Nation and not getting payed back. But anstrong economy will also have high rates because theres lots of investing oppurtunities so bonds will only attract investirs if they offer more money An economy doing kinda sluggish but not terrible will usually have the most demand for bonds and thus lower rates. And if the debt is low (Canadas case) then everyone fights to buy debt and rates drop super low other factors such as inflation, Central Bank rates, Political stability etc will also influence how much return investors demand for a Nations debt Link to post Share on other sites More sharing options...
Miker 5,683 Posted January 17, 2016 Share Posted January 17, 2016 The cost of imports are being hit hard particularly fresh produce as the Canadian Dollar drops. Mars..........or bust! Link to post Share on other sites More sharing options...
Economy 52,889 Posted January 17, 2016 Author Share Posted January 17, 2016 3 minutes ago, Miker said: The cost of imports are being hit hard particularly fresh produce as the Canadian Dollar drops. These low rates arent helping cause outside investors dont exchange currency to buy into our market, its all domestic buyers from within Canada neverthless the drop in Canadian Currency globaly gas only been modest. Its the US Dollar that has rallied Most food comes from the US so food has seen a good increase imports from Europe, China and Japan have been mostly unaffected because our currency relarive to them is unchanged mostly Link to post Share on other sites More sharing options...
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