August 19, 2009

Inflation: Lowest in 56 Years at –0.9%

That’s the headline inflation number from today’s CPI report. Headline inflation is a YOY figure that includes volatile food and energy prices.

On the other hand, core inflation (the Bank of Canada’s key metric), is fairly buoyant at 1.8%. That’s just shy of the BoC’s 2% target.

Bond yields fell on the news. The 5-year GOC yield is down to 2.49% at last look--a four week low. For trader-types, key support is around 2.40%.

Yields have slowly drifted lower for the last week and a half. That may push some non-bank lenders closer to 4% again on 5-year fixed mortgages.