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BOC Decision Day | Global Bond Market Flashes Warning Signs

Published May 29, 2019
  • This morning, the Bank of Canada is widely expected to leave interest rates unchanged; markets expect the central bank is in no hurry to move the rate any time soon. The policy announcement will come at a time when the economy is starting to show signs of picking up after major deceleration towards the end of last year, largely caused by a drop in domestic oil prices.
  • Global government bond yields are plummeting again, with the US 10-year trading at 2.23% this morning amid increasing global trade tensions. The spread between 3-month and 10-year American treasury yields has narrowed the most since 2007.
  • There are growing concerns over China using its monopoly in the global supply of rare-earth elements as a means of countering US trade measures. The main outlets for the Chinese Central Party have recently published reports highlighting this possibility as the country controls 80% of global supplies.
  • This morning reignited investor apprehensions over the health of the global economy. That trade outlook is hammering back at oil again, as a barrel of West Texas Intermediate dropped more than 2.5% this morning to trade at $57.80.