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Market Commentary April 5, 2016

Market Commentary

It looks like just about everyone has decided interest rates are going to remain low, longer. Ottawa appears to be betting on it and the latest comments from the U.S. Fed seem to support that expectation.

Recent comments by Finance Minister Bill Morneau, regarding government bonds, suggest the federal government is counting on interest rates remaining low for at least the next two years.

"At this stage most of our issuance is really in the two, three, five, seven years, and that's based on where we see the financing opportunities and the appropriate cost for us at this stage" said Morneau, in an interview with Bloomberg in New York last week.

Ottawa has issued $133 billion in shorter maturity debt to fund major spending plans announced in last month's budget.

Of course Canada's smaller economy is subject to global – particularly American – fluctuations. But the U.S. central bank's recent announcement that it is maintaining its "go slow" policy has reduced concerns about events south of the border.