Significant rate catalysts often come out of left field. Case in point: collapsing Canadian oil prices. Check out this chart below. It shows Canadian oil (a.k.a., Western Canada select, or “WCS“) rapidly cheapening versus higher-demand “WTI” oil from the U.S. This is arecord discount. Its thickness, inferior quality and delivery challenges mean Canadian oil always trades at a discount to...
The wait for good news on trade is over. The U.S. and Canada reached a last-minute deal on Sunday to replace the currentNorth American Free Trade Agreement (NAFTA). And we’re seeing the rate effects already. Canada’s 5-year bond yield, which steers fixed mortgage rates, has rallied to a fresh seven-and-a-half-year high. The new deal, called the United States-Mexico-Canada Agreement (USMCA),...
“You better be prepared to deal with rates 5% or higher. It’s a higher probability than most people think” —JP Morgan CEO, Jamie Dimon What if interest rates surged far higher and faster than you now envision? Picture this scenario for a moment: U.S. core price inflation above 3% for the first time since 1995 U.S. unemployment at 60-year lows...
The “neutral rate” has taken on a life of its own. The Bank of Canada is talking about it, analysts are talking about it, the media is talking about it and everyday mortgagors are talking about it. Millions of Canadians, us included, use it as reference when trying to estimate how high rates might go. But the neutral rate is...
AbsoTrumpingLutely. The more useful question is, what are the chances it will? Economists project Canada’s economy could shrink 1.8% in 2020 if the U.S. pushes us into a global trade war. In that case, we’d fall into recession in late 2019 or early 2020, they say. Canadian exports would dive, partly due to U.S. tariffs making our goods too expensive...
“We cannot withstand a trade war with the United States” – Rona Ambrose. When over 70% of your exports go to one country, and that country’s representativessay,“There’s a special place in hell,” for your Prime Minister, that’s a problem. This is what the state of relations has come to between two of the world’s closest allies. Given Trump’s tendency to...
Captain Chaos, a.k.a., The Golden Wrecking Ball, a.k.a., President Donald, has just punched America’s allies in the face with a short-sighted metals tariff, a move Canada and the EU proclaimed “totally unacceptable.” Canada, being the largest exporter of steel to the U.S., immediately counter-punched today with tariffs on U.S. exports. All of this doesn’t look good if you’re hoping to...
All it takes to derail an uptrend in mortgage rates is one little global crisis. And that’s potentially what we’ve got. Canada’s 5-year bond yield—which drives fixed mortgage rates—has plunged. As of this writing, it’s down almost 30 basis points from its high two Fridays ago. This latest nosedive is courtesy of shoot-first-ask-questions-later AAA bond-buying. (Rates move inversely to bond...
The worst trap a mortgage expert can fall into is thinking they’re shrewd enough to predict interest rates. Yet, they do it because they: Think they’re smarter than the market Want media, readers or clients to think they’re smarter than the market Are completely delusional. The most comedic rate commentators are the ones who couch their predictions in vagaries so...
New data has more than a few observers second guessing Ottawa’s latest mortgage clampdown. RE/MAX’s 2018 Spring Market Trends Report quantifies the by-products coming from one of the biggest mortgage rule changes ever, the uninsured mortgage stress test. The data beg the question, are the side effects worse than the government’s medicine? More Buyers Are Being Hamstrung One in four...
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