Categories for Economic Analysis

Friday’s Unemployment Number May Change the Game

Canada just witnessed its worst spike in unemployment since the Great Recession of 2009. An estimated 71,200 jobs were lost in November. And we all know what happens when unemployment bottoms and starts climbing. Rates usually drop. Is This Really the Bottom in Unemployment? No one knows what tomorrow will bring (until tomorrow). But here’s what we know: Economic cycles have...

A Trade Deal Won’t Change Long-term Rate Trends

With just 12 days until Tariff Man’s next round of threatened tariffs kick in against China, and with new import taxes now threatened on Europe and South America, the market pendulum has swung back to pessimism. “If tariffs scheduled for Dec. 15 are implemented, it would be a huge shock to the market consensus,” Manulife Investment Management’s Sue Trinh told...

Unemployment as a Rate Indicator

People are constantly hoping to time the rate market, despite how ineffective it may be. For the brave souls who try, here’s some interesting research from the U.S. Federal Reserve. One of its economists, Claudia Sahm, has documented a pattern in unemployment data. In her Fed report, she writes, “…Comparing the three-month average [U.S.] unemployment rate to its low over the prior...

Inflation Ringing No Alarm Bells

If you knew where inflation was headed, you’d have a great chance of knowing where mortgage rates were headed. The latter rises and falls with the former. That’s why so many people try to predict inflation. Among the many who think they know where it’s going: The 100 senior Canadian businesspeople surveyed by the Bank of Canada every quarter 2...

Rates Lift Off on Trade Truce Hopes

Bond yields erupted Friday for the biggest two-day gain since 2011. Canada’s 5-year yield—which is closely watched for its influence on fixed mortgage rates—closed at its highest point since July. This comes after the Trumpinator heralded a potential U.S./China trade truce. The trade war, now a year and a half old, has pounded mortgage rates on the assumption that weaker...

RateWatch: Bond Yields Going Vertical

Some people think we’re in a bond market bubble. If that’s true, and we’re not declaring it is, the last four days are kinda what you get when a bubble pops. Bond investors are in a momentary state of panic. Canada’s bellwether 5-year government yield has catapulted 31 basis points in just four trading days. The last time that happened...

Trade Tantrums. Keeping a Lid on Mortgage Rates

Just when you think it’s safe to go back in the water, just when you think rates might be putting in some kind of floor, the bottom falls out again. Canada’s 5-year government yield did a 180 on Friday. After shooting higher earlier, it plunged 11 bps to end the week. It falls that much only about 1 in 100...

Negative Mortgage Rates in Canada

I had a chat with BNN Bloomberg’s Greg Bonnell Monday about “sub-zero mortgage rates.” A dozen years ago, uttering those words might have branded you a radical. Some would have questioned your credibility had you even proposed the thought of banks paying borrowers instead of collecting interest from them. And now with global yields at 120-year lows, it’s happening. Negative mortgage...

The Mortgage Risk of Resurrecting Inflation (+ Rate Nuggets)

In 18 days the Fed is expected to do what it’s virtually never done: inflate the U.S. economy with a rate cut — despite 50-year lows in unemployment and record highs in stocks. Some argue the Fed is dangerously veering off its normal course, that Trump’s browbeating of Powell is working. The risk is clear: more inflation. And inflation is...

Trump vs. Xi. Let’s Get Ready to Rumble

Not much going on this weekend. Only a little meeting between the world’s two most powerful leaders about 2019’s single most important economic issue. U.S. prez Trump and Chinese supreme head communist guy, Xi, collide over trade ahead of Saturday’s G-20 summit in Japan. And, batten down the hatches, because it has the potential to be a short-term tide changer...