FormerXBC Inc XEBEQ

Basic economics

[tamaracktop]

Overnight, all of the index futures tracked the movements of the 10-year yield. The rise in interest rates itself isn't surprising, it's the speed they have shot higher that's surprising. Rates are already up half a percent this year. The bond market is reacting to an expectation of an improving economy as GDP forecasts rise.
   The markets are discounting a return to a semblance of normalcy, and have been favoring stocks that will benefit from the reopening, such as travel and dining, etc. Energy is up 7% in the last week. As GDP forecasts rise, so do corporate earnings.   Certainly, rising rates aren't all bad. Granted, the 10-year yield is a benchmark for mortgages and auto loans, and obviously reduces the discounted value of future cash flows, but we have to keep in mind why these rates are rising.
   Surely no-one expected rates to stay below 1% forever.

[Newtrader1982]

Actually yes people did believe they would stay at 1% forever. I have even seen several people suggesting that interest rates would go negative like in Japan. I guess they think they can't raise the rates without crashing the economy and housing market so they would avoid it by using negative rates. I have been trying to purchase a home lately and what is happening in the housing market is

[newcoin]

Great post. Amazing how the pendulum swings. Everyone thought Covid would cause a Real Estate crash and now we see just the opposite. I have a property coming up for sale soon in Radium, BC. I hope I get 20% more than it's worth.

[Resilience19]

@newcoin, list it at +20% what it's currently worth, up front, and perhaps you'll end up getting 20% on top of that, for a total +44%!...

[newcoin]

Oh boy, I love that! Make hay while the sun shines! LOL!!

[Newtrader1982]

you could try but I don't think that is quite how it works and I have no idea what the market is doing in BC but ontario everyone is selling in Toronto for over a million and moving to surrounding areas with tons of cash bidding up the house prices. Agents are intentionally listing low prices to intice a bidding war.

[newcoin]

I've had a tenant in the property for 10 years. The Realtor says I don't even have to fix it up. The market is so hot it'll just sell without spit and polish. People moving out of Calgary to the rural areas.

[ferret_ca]

the main reason bond yields shot up yesterday was because there was a huge shortage of buyers for the govt bond issue, big players reacted quickly adjusting portfolios causing the big drop yesterday, which could continue a bit but to a muchlesser degree. yes bond rates will eventually creep up but they were also at all time lows and still close to them, Powell emphatically stated in his 2 day

[XBC333]

I do know the US government can not afford to let interest rates rise because they are the biggest debtor. How they go about keeping interest rates low or even drive them negative remains to be seen. For sure we will pay the price for all of this because they sure arent planning on paying!