As you likely follow financial news, you may have noticed that more attention is being placed on the recent inversion of 10-year bond yields. A few weeks ago I wrote about what may happen if the yield curve inverts. Well, it now has happened.

This is important because every time the yield curve has inverted in the past, we have had a recession within 2 years. Combined with the news that the Bank of Canada announced Wednesday that it’s raising rates to 1.00% to combat a 40-year record inflation rate and you start to see all the signals pointing in the same direction. As the saying goes, “If it looks like a duck, and walks like a duck, then it’s probably a duck!”. Perhaps we should be prepare ourselves for a recession in the coming year.

CIBC Asset Management has also released a report on the flattening of the yield curve, suggesting that a recession in either the U.S. or Canada is not imminent. The report "Yield Curve Inversion" is attached for your reference to dig deeper into the details.

As always if you have any questions, feel free to give us a call at any time.

Have a great long weekend.

Milan