Research: Loonie paradox and distorted yield curve Dec 19, 2019 Loonie paradox and how the budget deficit might distort the yield curve By Erik Norland, Senior Economist, CME Group Loonie paradox: Does China drive Canada/US dollar rate? China exerts a stronger influence on CAD/USD exchange rate than US China’s sway felt through commodities, which comprise half of all Canadian exports Is Canadian household, corporate debt rising above US levels a concern? Canada’s smaller government debt will allow for fiscal stimulus if growth slows Read article Is growing budget deficit distorting the yield curve? Credit crunch at short end of yield curve has raised LIBOR rates vs T-bills At the long end of the curve, T-bill yields are higher than swap rates Distortion of the yield curve can be attributed to growing budget deficit Is the yield curve sending a signal about US economic growth? Watch video SEE MORE ANNOUNCEMENTS
