Yatter Matters

Royal Bank of Canada have revised outlook.

• expect the Fed to cut rates a further 75 basis points to 3.75% over the next three meetings. This is a change from the 25 basis points in the previous forecast.
• expect the Bank of Canada to lower rates by 50 basis points to 4% rather than just by 25 basis points - this should happen in early 2008
• the year end 2007 forecast for 2 year yields is 3.25% (down from 4.1%) and 10 years at 3.95% (down from 4.25%) - this is an indication of where mortgage rates are going.
• they expect the Bank of Canada to raise rates again in the final quarter of 2008 - the overnight rate will be raised to 4.25% with market interest rates of 4.25% in the two year maturity and 4.7& in the 10 year
.