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I've only seen some hyperbole reaching that far. The highest they got since 2010 was 1.75% in late 2018.
Yeah and the Montreal interest rate futures are pointing more towards that general zone, for late next year.

I'm still doubtful the Bank of Canada will actually raise that much. One or two raises and the real estate market could be in big trouble. This zero interest rate supported housing bubble is not the kind of party you can just pull the plug on.

But who knows. Should be exciting!
 

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Haha maybe not this time, well, not my expectations. I expect the big crash, but not the big recovery. We'll be in 2030 and S&P500 will still be under 4,000. But that's just my personal speculation. More like 2000s, but a bit less intense because valuation spreads aren't as crazy
Funny that now I am, relatively, the bull! I expect the S&P 500 to still rise this year.

Who knows though
 

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How do you end up adding to your stocks? With stocks at ATH and since you are balancing your asset classes to fixed weightings, I would've thought that all of your cashflow would've been going into bonds or gold which can't keep up with stocks at the moment.
Edited the post after I realized I miscalculated the net effect. This was some rebalancing and some offsetting between accounts.

Turns out I have no changed in my S&P 500 position. Just a few trades that evened out. My net stock exposure remains the same.

Currently the S&P 500 is 13% of my total portfolio. Unchanged.
 

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They'll start rising the policy rate, we'll reach near 2% policy rate
You really think they will get that high? The current Bank of Canada policy rate is 0.25%.

I think they will barely get to 1% by the end of this year. That would be 3 increases of 25 basis points each. Canadians are very high leveraged and already this will be painful for most people. Businesses, who depend on ultra low rates, will also start screaming in pain.

Hopefully I'm wrong, and hopefully we have much higher interest rates. As a fixed income investor I'd really like better yields in my portfolio.
 

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This is an interesting recent Nanos poll asking Canadians whether they are more worried about rising prices, or higher interest rates.

87% of Canadians said they are more worried about the current pace of rising prices than higher interest rates.

Kind of surprising that most Canadians actually support higher interest rates. This will encourage the Bank of Canada to follow through with rate hikes, I hope.
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Strong employment data in the US has tilted the odds even more towards Federal Reserve tightening.

Bloomberg says that interest rate derivatives show a 90% chance of a Fed hike in March. On the other hand, these predictions can change dramatically week to week.
 

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Economists expect the Bank of Canada to raise rates next week, January 26

Interest rate derivatives suggest 70% probability of a rate hike in a week.

 

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Anyone think there could be fireworks tomorrow?

BoC is likely to raise rates in the morning, and then a few hours later, the Federal Reserve releases minutes which will show what they think about rate hikes and ending QE.

I think the USD/CAD exchange rate could also swing around tomorrow as both events happen.
 

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I wonder if this is a new tactic in central bank policy: using words (instead of actions) to implement policy.

Maybe they'll just keep warning that tightening is coming, wagging a finger and saying rates could skyrocket. Perhaps the idea is that this fear is enough to restrain markets.
 

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I'm starting to see some interesting yields within short term corporates.

IGM Financial, 2027/12/13, coupon=6.65%, YTM=3.08%
Brookfield, 2027/03/16, coupon=3.80%, YTM=3.04%
Brookfield, 2026/01/28, coupon=4.82%, YTM=2.93%

Unfortunately the Bank of Canada was a buyer of these bonds and manipulated their prices. Does anyone know if the BoC has dumped their corporate bonds yet?
 

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Canada added more than 2x the number of jobs expected by economists. The economy is roaring. The unemployment rate is down to 5.5%, the first time the unemployment rate is below the start of the COVID pandemic.

The number of hours worked has exceeded the pre COVID level, and has also hit a new all time high.

With a booming economy, the Bank of Canada should have little excuse to not raise interest rates further, maybe?

 

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^ I would read that article with a grain of salt since it didn't say what kind of "jobs" were they other than artificial optimistic numbers spruce-up.
That's a good point. But nevertheless, "hours worked" has surged.

Unfortunately all this gig economy stuff, which I warned about long ago, is flooding the country with many low quality jobs. We need a serious unionization effort to help protect these workers from severe exploitation by Silicon Valley companies.

We need much more government regulation to help protect workers from this new form of exploitation by Silicon Valley.
 

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10 Years Treasury Yield has increased to 2.24%....bull market is going to downhill.....good for those who are in accumulation stage.
Yeah and the Canadian 10 year is about the same. Perhaps more importantly the 5 year bond yields have gone up dramatically.

During 2020, the 5 year yield was only 0.30% and today it's 2.2% so an increase of nearly 200 basis points! Many business financing costs are tied to the 5 year, so businesses will very soon start feeling pressures from higher borrowing costs.

My guess is that we're entering a bear market in stocks for a few years. Might want to make sure you hold enough bonds & GICs to weather the storm.
 

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Bear markets last about 1-2 years. Longest bear market was the great depression. Bring it on... buying opportunity for those with long time horizons
Yeah, they're great for shaking out all the "weak hands".

Bear markets tend to destroy the greedy, and destroy those who were using a bad strategy and simply got lucky. In good times like 2020-2021, everyone was a winner, no matter what they did.
 
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