Canada Recession Threat Renews Rate-Cut Calls

The threat of a recession and lower interest rates in Canada are making the Group of Seven’s best-performing bond market even more attractive.

The gap in five-year yields between Canada and the U.S. widened to 88 basis points, the most in more than a decade as more economists call for a Bank of Canada rate cut, possibly as early as July 15. Yields are falling in Canada to reflect the assumption a slowing economy will keep inflation, the bond market’s bogeyman, at bay.