At the close of the week, the 10 year Government of Canada bond yield reached 3.07%, which is the highest it has been since May 2011!
Going 10 more years back in time, it got up to 6% in 2001. How high yields will go, who knows……
My other comment is regarding the first phase of quantitative tightening. On May 1, the first slab of Bank of Canada-held government debt ($12.6 billion) matured and this is the impact it had on the balance sheet of the Bank of Canada:
Note that individual tax return payments were due to the government of Canada by April 30, hence the increase in its deposit balance with the Bank of Canada. However, the important figure is the $200 billion held in reserve by “Members of Payments Canada” (i.e. the big banks) which is declining. Upcoming maturities are $3.1 billion in June and $16.8 billion in August.
Capital is on its way to becoming an expensive resource once again. Position accordingly.