Fixed rates may be on the move UP...
It's time to keep an eye on fixed rates, as the bond yields and spreads on 5 year fixed are pointing to a potential rise in rates.
May 25th Market News:
U.S. confidence data drives sharp loonie rally -TSX rallies as BMO tops estimates-Oil hits six-month high on consumer confidence
§ TSX+216.40 to 10,285.90 climbed to their highest closing level since October on a big jump in U.S. consumer confidence this month and a favorable start to second quarter bank earnings releases.
§ DOW +196.17 U.S. data showed that consumer confidence rose in May to its highest level in eight months.
§ Dollar +.45c to 89.46USD touched its loftiest level in more than 7 months, spurred by a rise in oil prices and by upbeat U.S. economic data that whetted investor appetite for risk.
§ Oil +$.78 to $62.45US per barrel hit a fresh 6-month high, bolstered by U.S. consumer confidence data and comments from OPEC kingpin Saudi Arabia that prices may continue to rise.
§ Gold -$5.60 to $953.30USD per ounce
§ Canadian 5 yr bond yields +.09bps to 2.37- Four weeks ago it was 1.93. The spread, based on 5 yr rate of 3.89%, is now lower again at 1.52%.
§ http://www.financialpost.com/markets/market-data/money-yields-can_us.html?tmp=yields-can_us
Historically spreads have been closer to 2% or 2.25%. In January the spread was 3.30, however cost of funds had risen drastically with the "credit crunch" With today's spread of 1.52%, half of January's, rates are artificially low. Watch for fixed rate increases-two lenders increased on May 25th already.
