Well, just when you thought the trend was to higher 5 year rates, the Goverment of Canada 5 year treasury yields are dropping again.
http://www.bloomberg.com/apps/quote?ticker=GCAN5YR%3AIND
In mid June, the 5 yr yields, which drive the banks setting of fixed rates, were topping 2.81% which led to the increase in rates for fixed term products by 0.75 - 1.00%. A month later? These yields are slipping below 2.40% as I write this, but are the banks going to move?
Bank insiders have said no based on 2 facts:
Profitability, if the banks keep the rates at present levels but their cost of borrowing drops they make more money!! And, after all, that's what they are in business for...
Secondly, with the ups and downs in many economic factors on a weekly basis the banks are in a "wait and see" mode. No point in lowering rates just to move them back up just as fast.
In my opinion, a little stability is welcome!!
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