Some good news to report from the international credit markets. First the 30 day bankers acceptance has dropped to it’s lowest point EVER at .90%. Given that historic yields for variable rates over bankers acceptance is 1.69% and the current spread is 2.10% it would suggest that there will be room for lenders to absorb an expected .50% drop in the overnight rate by the Bank of Canada on March 3. So this is good news for all those people who held on to their variable rate mortgages, as well as of course for those considering to jump into the housing market.
Five year bond yileds also jumped up to 2.14% whcih would also suggest that fixed rates could head lower.
Finally, maybe the best news of all is that the TED spread (this is the most telling statistic for forecasting the amount of liquidity risk global lenders have priced into their activities, which means the lower this drops the more money available in the system to lend and keep the economy going). The TED spread continues to fal, this is great news.
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