Canada CAD

Canada 5-Year Bond Auction

Impact:
Low

Latest Release:

Date:
Actual:
1.524%
Forecast:
Previous/Revision:
1.315%
Period:
What Does It Measure?
The Canada 5-Year Bond Auction measures the demand for Canadian government securities with a five-year maturity, reflecting investor sentiment regarding credit risk and interest rates. It primarily assesses borrowing costs and market liquidity, with key indicators including bid-to-cover ratio and yield offered, suggesting investor confidence in government debt.
Frequency
This auction occurs regularly, typically on a quarterly basis, with specific dates published by the Government of Canada, and it releases final results rather than preliminary estimates.
Why Do Traders Care?
Traders pay close attention to the 5-Year Bond Auction as it directly influences government borrowing costs and signals investor confidence in the economy, impacting the Canadian dollar and broader financial markets. A strong auction result often bolsters confidence in the country's fiscal health, leading to a bullish outlook for equities and the currency, while weak results may trigger concerns over economic stability.
What Is It Derived From?
The auction results are derived from bids submitted by institutional investors, financial institutions, and individuals looking to purchase the bonds. The calculation involves determining the total number of bids received versus the amount offered, alongside the yield that investors are willing to accept for taking on the risk of lending to the government.
Description
The 5-Year Bond Auction serves as a critical indicator of market conditions and investor sentiment. It is particularly significant in gauging the government's cost of borrowing and offers insights into future interest rate movements, with higher yields often indicating increased investor risk aversion or expectations of rising inflation.
Additional Notes
As a leading economic measure, the outcome of the auction provides insights into broader trends such as inflation expectations and monetary policy direction. It can also be compared to other similar auctions domestically and internationally, with its results often influencing the yields of other securities and the overall bond market.
Bullish or Bearish for Currency and Stocks
Higher than expected: Bullish for CAD, Bullish for Stocks. Lower than expected: Bearish for CAD, Bearish for Stocks. A dovish tone: Signaling lower interest rates or economic support is usually good for the CAD but bad for Stocks due to cheaper borrowing costs.

Legend

High Potential Impact
This event has a strong potential to move markets significantly. If the 'Actual' value differs enough from the forecast or if the 'Previous' value is significantly revised, it signals new information that markets may rapidly adjust to.

Medium Potential Impact
This event may cause moderate market movement, especially if the 'Actual' deviates from the forecast or there's a notable revision to the 'Previous' value.

Low Potential Impact
This event is unlikely to affect market pricing unless there's an unexpected surprise or a major revision to prior data.

Surprise - Currency May Strengthen
Actual deviated from Forecast on a medium or high impact event and historically could strengthen the currency.

Surprise - Currency May Weaken
Actual deviated from Forcast on a medium or high impact event and historically could weaken the currency.

Big Surprise - Currency More Likely To Strengthen
'Actual' deviated from 'Forecast' more than 75% of historical deviations on a medium or high impact event and may likely strengthen the currency.

Big Surprise - Currency More Likely To Weaken
'Actual' deviated from 'Forecast' more than 75% of historical deviations on a medium or high impact event and may likely weaken the currency

Green Number Better than forecast for the currency (or previous revise better)
Red Number Worse than forecast for the currency (or previous revise better)
Hawkish Supports higher interest rates to fight inflation, strengthening the currency but weighing on stocks.
Dovish Favors lower rates to boost growth, weakening the currency but lifting stocks.
Date Time Actual Forecast Previous Surprise
Nov 10, 2021
1.524%
1.315%
Oct 13, 2021
1.315%
0.919%
Sep 21, 2021
0.919%
0.962%
Aug 11, 2021
0.962%
1.003%