Oaken HISA Up and GIC's Up & Dn | Page 2 | Oaken Financial | Discussion forum

phrank said
I think a lot of people may be mistakenly imagining people in these banks deciding what the rates will be in a meeting or after crunching the data. What I was alluding to was that these sorts of decisions are governed by AI now and AI is only getting better at maximizing profit for their owners by creating volatility which it controls and thereby benefits from.

Whatever being suggested in this paragraph is simply incorrect.

Online forum is just way too easy for anyone to say anything they want, whether it’s fact check or fake or a genuine mistake or truth….

Bill said
Same goes for those who say something is incorrect, where's your evidence it's incorrect?

I have no idea but I don't find it unreasonable to think, in 2022, that AI, based on analysis of a myriad of variables, wouldn't have a hand, maybe even the determining hand for some fi's, in indicating at the morning meeting the appropriate GIC rates a fi should offer today.  

I never guess or speculate when making a concrete statement on this site.

What I said was a fact after spending 20+ years in the FI rates world, and I was front office staff that made those decisions. And someone close to me is currently IN the exact same area of the bank that makes those decisions. Programs are used to collect data, run reports and scenarios. but AI is NOT used to set mortgage rates, GIC rates.... AI is indeed used to run algo in the equity market, and maybe to some extent in FX world, but not in how banks set their lending rate, GIC or the like. AI is good for fast number crunch to capture minute price move and similar, GIC rate setting is not a lightning fast operation for AI to "have an edge". It is indeed true that AI makes the equities market more volatile, as they all push the market one way or the other, but not in the rates market.

@Phrank if you have industry experience to prove me wrong, I would love to hear it.

cgouimet said
BTW ....

Oaken changed some rates earlier; some up, some down ...  

its the AI messing around 🙂

RetirEd said
phrank: This has spread to more financial institutions. Are they really colluding on this? That would be illegal. And any FI that cut rates would lose new deposits to competitors if the competitors weren't doing it too.

I suspect this is more likely the deposit takers "pricing in" anticipated downturns, despite the US Fed's possible rate hikes to come in the next month or three.

I have no crystal ball, and you make your own decisions, but I'm glad I "took the five" earlier this month. Which is to say, my pennies have already dropped.
RetirEd  

Agreed - most banks want 5 year money to use for 5 year mortgages - not many of those flying out the door lately. So the demand for long term GIC is low - hence the rate drop

Martster said

Are you receiving this via an email from Oaken or is it on the web somewhere - I was unable to find it..  

Via email alerts.

Do you guys expect the 2 year rate to drop elsewhere?

The BoC is still going to raise rates at least a couple more times ... maybe the GIC rates are squishing down, so there is a smaller difference between rates of different terms, then they will all rise together in a way that correlates with the BoC rate increases?

Sounds reasonable. How do you think those 2 proposed 75bps raises will affect longer term rates?

Fact
cnbc.
Powell said this is “no place to stop or pause”

Powell cautioned that the Fed’s focus is broader than a month or two of data, and it will continue pushing ahead until inflation moves down closer to its 2% long-range goal.

In essence, Powell is clearly stating that right now, fighting inflation is more important than supporting growth,

Powell noted that the history of high inflation in the 1970s, when the central bank sought to counter high prices with only intermittent rate hikes, shows that the Fed must stay focused.

"The historical record cautions strongly against prematurely" lowering interest rates, he said. "We must keep at it until the job is done."

IMO. will see the GIC rate by the end of the year between 6%-7%

agit said
IMO. will see the GIC rate by the end of the year between 6%-7%  

That’s an aggressive target but also a wide range too

When central banker give a speech, it serves both to prep the market, but also indirectly steer the market and end up without really taking the entire action they ‘discussed’. So while it’s true they are not done raising rates the next 1 or 2 meetings, if equity and housing market keeps on correcting and plumber, the demand side of the economy will evaporate as well. That will bring down oil price, commodity prices, people will lose their jobs, inflation will correct itself.

Also GIC is not a main source of funding for Canadian banks, maybe a little more important for credit unions, but not as important as a GIC investor like to think.

BoC wants FI’s lending rate to follow the bank rate as that curbs inflation, BoC don’t really care what happens to the deposit rate.