BlackRock Is Worried About Canada’s Yield Curve
- Money manager says BOC too sanguine as yields converge
- Curve has long history of foretelling economic deterioration
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As Canada’s yield curve sits on the cusp of inverting for the first time in more than a decade, the nation’s central bank believes there’s little cause for alarm. The world’s largest money manager isn’t so sure.
Bank of Canada Governor Stephen Poloz says overwhelming demand for long-dated bonds is distorting the curve’s recession signaling mechanism. Yet BlackRock Inc. says banks will become increasingly reluctant to lend as Canada’s term structure turns negative.