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Two-year bonds see biggest 3-day yield decline since 1995
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Investors seek havens after failure of two US regional banks
The yield on short-term Canada bonds is falling at the fastest rate in decades, as investors bet the Bank of Canada will cut rates in coming months to counter fallout from the collapse of US regional banks.
Canada’s two-year benchmark yield tumbled 42 basis points Monday to 3.532%, bringing its total decline since Wednesday to about 77 basis points. The last time the benchmark dropped that much over three trading sessions was in May 1995, according to data compiled by Bloomberg.
Traders in overnight interest swaps are now pricing in rate cuts from the Bank of Canada by June. Last week, traders were expecting the next move to be a hike.
It was a day of investors seeking safe havens as the collapse of regional US lenders Silicon Valley Bank and Signature Bank rattled investor confidence in the US banking system. Gold jumped and US Treasury yields also saw a historic decline. Economists at Nomura Securities