Yield curve inversion hits widest in Canada since early 1990s
BNN Bloomberg
A key part of Canada’s yield curve is now at the steepest inversion since the early 1990s, a possible warning sign for the economy.
The yield on Canada’s benchmark 2-year debt reached 100 basis points above 10-year bonds on Monday. It’s the largest gap since the early 1990s, just as the country’s economy was plunging into a deep downturn. The two-year yield was just below 3.8 per cent at 8:13 a.m. Toronto time.
A yield-curve inversion often precedes a recession as investors move money to longer-duration debt in the face of rising near-term economic concerns. It’s currently a global phenomenon, with short-term yields around the world pushing higher as markets price in further rate hikes from central banks working to slow inflation. Two-year Treasuries yield about 78 basis points more than 10-years.