Interest Rates Have Peaked

by JDH on October 7, 2023

I’m calling it: interest rates have peaked.  It’s all downhill from here.  I’ll be more specific:

The Canada 5 Year Government Bond Yield peaked at 4.461% on Tuesday, October 3, 2023, a 11:45 am.  Here’s the chart:

That’s crazy, you say.  The trend is clearly upward.  Yes, it is, but here’s my thought process:

The 5 year yield made a “double bottom” back on August 1, 1997 and October 1, 1998 at 4.466%.  Those levels then formed the upper resistance in 2006 and 2007, and interest rates have trend below those levels ever since.  That’s a long time.  Here’s the chart:

So will those previous resistance levels hold?  I think so, for the technical reasons stated above.

But there are also signs that unemployment is on the way up, consumers are fatigued by high prices (which is why inflation is dropping) and the stock market is under pressure.  Those are signs of a recession, and in a recession, interest rates fall.

Let’s see if I’m correct.

(I’ve never been correct before, but there’s a first time for everything).

Happy Canadian Thanksgiving; see you next week.