Let's chat: 306-227-7367
|
My Mortgage Blog

Photo: Gage SkidmoreCC BY-SA 3.0, via Wikimedia Commons

Five-year Government of Canada bond yields plunged and odds of multiple Bank of Canada rate cuts in the coming months soared as Donald Trump’s tariff war sent financial markets into a tailspin on Tuesday.

The president’s decision to push ahead with huge tariffs against Canada and Mexico sparked a fierce retaliation by the Canadian federal government and a stinging rebuke by Canadian prime minister Justin Trudeau.

Those five-year government bond yields – which lead fixed mortgage rates in Canada – had slid to 2.63% at time of writing, down from about 2.87% in mid-February, while major banks including Royal Bank of Canada (RBC) and Bank of Montreal (BMO) said deeper central bank rate cuts than originally expected were a distinct possibility in the months ahead.

Trudeau accused Trump of targeting a “total collapse” of Canada’s economy to allow the US to take over its northern neighbour as the tariffs and Canadian countermeasures came into effect.

The prime minister said Trump’s moves, which included 25% tariffs on all Canadian goods crossing the border and a 10% levy on Canadian energy, were designed to further the American president’s oft-stated goal of making Canada part of the US.

“What he wants is to see a total collapse of the Canadian economy, because that will make it easier to annex us,” Trudeau said during a televised address on Tuesday afternoon. “That’s never going to happen. We will never be the 51st state, but yeah, he can do damage to the Canadian economy, and he started this morning.