The Globe and Mail reports in its Friday, Aug. 28, edition that Canada may be involved in an escalating trade war with the United States, but mortgage markets remain unaffected. The Globe's Mortgage Rates unbylined column reports that bond yields and Bank of Canada interest-rate expectations remained unchanged following the breakdown of trade talks and the announcement of new tariffs by both the U.S. and Canada. Markets still expect a rate hike this year, with bond yields keeping five-year fixed rates above 4 per cent, despite a surprisingly muted response. A breakdown in trade talks could harm the Canadian economy, potentially leading to lower mortgage rates as bond yields and central bank rates decline, according to CIBC. CIBC economist Benjamin Tal says markets aren't reacting strongly because they view the tariff escalation as temporary posturing for negotiations, believing the current tension won't last. Mr. Tal, however, says the current calm in the market could unravel if there isn't a trade deal by Sept. 8, when the Carney government's counter tariffs of up to 50 per cent on a wide range of American goods are scheduled to come into force. The next BOC rate decision is set for next Wednesday.