Despite the high probability that a U.S. debt limit deal will be reached by the Treasury's June 1 deadline, traders took U.S. yields higher on Tuesday. Hawkish Fed chatter added further fuel to the gains. All that U.S. drama dragged Canadian yields higher in sympathy.

Rate-weary mortgagors have been waiting for this signal. The Fed Chair has suddenly shifted his tone and now appears more willing to let high rates do their work, with potentially no further hikes...for now. Here was Jerome Powell's money quote from Friday:

Canada's mortgage rate market has been deader than a mausoleum. Leading 5-year uninsured rates haven't changed for weeks, and the only nationally-best offer that moved this week was the insured 4-year fixed, up five bps. Mortgage rates have been in limbo largely because yields are stuck

When a central bank stops hiking rates, there inevitably come times when they second-guess themselves. Today is going to be one of them. The real estate numbers that CREA just dropped displayed a resilience that doesn't jibe with 300-425 bps of rate increases and potential recession. BoC governor