May 29, 2023

As of the close on Monday, with U.S. stock markets closed Toronto was up 0.2%.

When it comes to interest rates there was an interesting comment on BNN today. It was pointed out that as the debt ceiling approached the U.S. very significantly curtailed the issuance of new bonds. If so, that’s the first I have heard of it. Apparently they drew down cash at the New York Fed and now need to issue about a trillion dollars of debt just to replenish that cash and on top of that will resume regular bond issuance. At the same time, the FED is no longer buying bonds (which pushes interest rates down) but may also be selling some into the market. The thinking was that this will push interest rates up because of the extra supply of U.S. bonds. If so, that’s not good news for mortgage rates or for stock markets or bond valuations for that matter.

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