Yields crash = lower fixed mortgage rates coming. The five-year bond yield nose-dived 16 bps yesterday, crashing through “support” at 2%. It’s the biggest plunge in yields since March 2009.

Yields are hurtling lower in response to a slew of negatives, including:

• “Austerity measures” (spending cuts) built into Congress’ debt agreement. Those will drag on Canada’s economy
• Weaker economic data out of the US (like Monday’s brutal ISM number)
• Ongoing angst about the euro-debt dilemma

On a positive note, global investors are now finding Canadian treasuries far more appetizing – due, in part, to Canada’s AAA debt rating, budgetary prudence and stable currency. That has sparked a money rotation into Canada, adding to yesterday’s bond buying. (When investors bid up Canadian government bonds, our yields drop.)