by Wolf Richter
Housing craziness is front and center.
The Bank of Canada, which already holds over 40% of all outstanding Government of Canada (GoC) bonds – compared to the Fed, which holds less than 18% of all outstanding US Treasury securities – announced today that it would reduce by one-quarter the amount of GoC bonds it adds to its pile, from C$4 billion per week currently, to C$3 billion per week beginning April 26.
In its statement, it pointed at the craziness in the Canadian housing market – “we are seeing some signs of extrapolative expectations and speculative behavior,” it said.
Back in October, the BoC made the first reduction, tapering purchases of GoC bonds from C$5 billion per week to C$4 billion, and it had stopped adding mortgage-backed securities, of which it had never bought many to begin with.