Archive for March, 2010

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Interest Rate Anticipator

March 22, 2010

Recent inflation suggests a possible june increase in interest rates by BOC. There will be some monitoring of the yield curve. Low yielding investments will likely lose value as the new (increased) market value interest rate benchmarks will be a better investment.  The only way this may be mitigated is if there is a heavy flood of money into goverment issues, this will keep the spreads between your existing yields and new yields at a minimum. Movements to long duration bonds will only be wise if this increase in BOC rates is not too extreme and if a rising future yield curve can be established (conversely, strong  BOC rate increase does not incur a flat yield curve).  More as things uncover. There is no analogy to draw here..there is opportunity is all market conditions.

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