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A pedestrian walks past the Manulife building in downtown Vancouver.
A pedestrian walks past the Manulife building in downtown Vancouver.
(Jonathan Hayward/The Canadian Press)

How to know whether Canadian insurance stocks will be going up or down

Investors in Canadian insurance stocks should look to bond market strategists, not equity analyst reports, to predict future performance.

The chart below shows the amazing extent to which the U.S. bond market affects the stock price of domestic insurers. Using Great-West Life Co. as an example, domestic insurance stocks have been closely tracking the steepness of the U.S. Treasury bond yield curve. (The R-squared on the chart is extremely high at 0.88)