Motive leading the pack now for 1 through 5 yr GIC's | Motive Financial | Discussion forum

The next six months are going to get interesting. I expect the perennial leaders, Oaken and EQ, to respond quickly to Motive's precedent.

canadian.100 said

That is possible but in the event Canada goes into recession by the end of the year, which is a real possibility, rates will regress fairly quickly.  

I'm in the camp that believes a recession is inevitable as a result of inflation and interest rate hikes to deal with it. But I'm not too worried about that happening in the time frame you're suggesting. These things are like oil tankers...sheer momentum and size means that they can't stop or turn on a dime. That said, I think there could be some rate hike reversals at some point in 2023.

turquoise said

Yup, I think a recession is inevitable. But in the last couple of months, many Canadians have become even more afraid of inflation than a recession -- especially since it affects them (or is *perceived* to affect them) more directly and measurably. They can see the price of pickles going up.

At the same time, the BoC is obliged to keep in close alignment with the US Fed. If the BoC moves too fast on hikes CDN gets stronger relative to USD -- which is bad news for exporters (Canada is I believe the 12th largest exporter in the world). So you'll have inflation + recession at the same time = stagflation.

In a dictatorship stagflation is obviously unwelcome, but it's possible -- the people who trigger it don't have to worry about not sticking around. But in a democracy it's political suicide.  

Couldn't agree more. Interesting times. My sympathies to younger Canadians who have inherited this mess. True, many should have been aware of the impending disaster. But so many have been overtly recruited and taught to normalize the idea of being in debt in order to receive instant gratification.

lifeonanisland said

Couldn't agree more. Interesting times. My sympathies to younger Canadians who have inherited this mess. True, many should have been aware of the impending disaster. But so many have been overtly recruited and taught to normalize the idea of being in debt in order to receive instant gratification.  

Exactly. When I bought my first home in the late 80's I was ecstatic to get a great mortgage rate of 12.2%. And after I never went for the (very tempting) variable rates offered. I always went fixed. Though it was a higher rate, I knew what I would be paying. That scenario is pretty much unknown to younger folks these days and I'm afraid there will many more people "mortgage poor" or losing their homes in the coming years as rates go up.

Bill said
Stagflation is not at all political suicide in Canada, check out 1970s & 1st half of 1980s and you'll see we essentially had one prime minster whose name is still revered by many today. Play your cards right it's no problem. Gov't will just send/spend money to keep folks afloat, I don't think it'll be a disaster.  

Uhhh. No. Wrong.

A big thumbs up for their service and efficiency. From picking up the phone, to having them remove a hold on the newly transferred in funds, and use the $ to buy a GIC, total time taken under 3mins !

Next Bank of Canada interest rate update is June 1. Personally, I'm anticipating more GIC increases after that announcement.

https://www.bankofcanada.ca/2021/07/bank-canada-publishes-its-2022-schedule-policy-interest-rate-announcements-release-monetary-policy-report-other-major-publications/

turquoise said

Do you have a magic number in mind, or some other criteria, that will trigger you to move funds from short term into longer term GICs?  

It's really tough to figure out right now. I have an interest rate in mind that I would like to ladder as much as ten years out...and that's 6 percent. Given that Motive is at 4.55 for 6 years and beyond right now, and assuming that we see another 1.5 percent bump in B of C base rate over the course of the next three or four meetings, I think that number is possible. So I'm juggling special rates at Tangerine, and half decent short term GICs at Oaken and EQ, for the next five months or so, and then we'll see. What I'll try to gauge at that point is if the rate hikes have dampened inflation (lots of good analysis out there that it won't be enough). If not, there will likely be more hikes. If it has tamed inflation somewhat, my fear is that our debt-addicted, market-pumping (stock and real estate) government and central bank capitulate when they see home prices really pull back (and I think that they will), along with some real pain in the stock market. If they had guts, they'd stick with the program and rip that band-aid off completely. Again, my fear is that they have no guts (keep that party rolling!). If that pans out, it might be a short window of opportunity. Also a writer, BTW.