The past week was quite volatile. Stocks ended about 0.5% higher. Oil prices are down, just below $50 US per barrel.

It appears that Yahoo Finance has made changes to their data service, so the majority of my market outlook is broken. The interest rate portion, however, is based on Bank of Canada data and is included below.

The 3 month T-bill rate is 0.52%, the 1 year T-bill rate is 0.57%, the 3 year government bond yield is 0.79%, the 10 year government bond yield is 1.46% and the long government bond yield is 2.13%. The yield curve is normal. Long government bonds appear very overvalued. There seems to be very little opportunity for profit in bonds. A safe haven, such as tangible assets (eg. precious metals, real estate, etc.), may be a better bet.

Expected (forward-looking) inflation is 1.59%. This is within the Canadian central bank’s target band of 1% to 3%.

The equity risk premium for large caps, in Canada, currently appears to be 2.06%. For small caps, it currently appears to be 2.07%.

Market Outlook, April 24, 2017

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