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The Retire First Newsletter

June 2017

Canada Gets Left Behind  by Doug Allan

Canadian stock markets continue to get left behind as the world indexes move to record highs.  Powered by the Trump fueled US stock market rally, technology is currently leading the way. When Trump got elected; the yield curve, as measured by the difference in the 2-year rate versus the 10-year rate, increased by 50%, rising from .85% to 1.35%. This caused the American dollar to strengthen and the financials took the lead on the potential for expanded profit margin on this widening spread. That euphoria has subsided somewhat as long-term rates have fallen back and short-term rates have risen, causing the yield curve spread to fall back to .85%; the same level it was when Trump got elected.  This has caused the US dollar to fall back to pre-Trump levels and the financials have given back much of their gains.

 

 

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