Canada's Inverted Curve Steepens as Real Yield Turns Negative
- Three month yields top 10-year bonds, flashing recession risk
- Canada real yields decline at faster pace than in the U.S.
Stephen Poloz
Photographer: James Park/BloombergThis article is for subscribers only.
Canada has joined the U.S. in the inverted yield curve club, signaling a growing risk of recession that may keep Stephen Poloz on hold for his final 14 months as head of Canada’s central bank.
The yield on Canada’s 10-year bond dipped to 1.57 percent Monday, or 10 basis points lower than the rate on the three-month Treasury bill, compared with a gap of 6 basis points Friday. That inversion hasn’t happened since 2007, at the start of the financial crisis sparked by a U.S. housing crash. The 10-year inflation-linked bond, meanwhile, offers a negative yield in real terms, after accounting for consumer prices.