|
Call Now! 1-866-932-8412 or
Email: info@mortgagegirl.ca |
Softer than expected inflation in August has prompted leading analysts to suggest that the Bank of Canada should perhaps hold interest rates steady during the coming months.
Statistics Canada reported last week that the headline inflation rate was 1.7% in August on a year-over-year basis, while month-over-month consumer prices slipped 0.1%. Meanwhile, the core rate — which strips out volatile-priced items such as food and energy — remained unchanged at 1.6% in the month. Market consensus was for a headline rate of 1.9% and a core reading of 1.7%.
The figures indicate inflation poses no threat to the economy, and at present consumer price increases are running below the Bank of Canada’s forecast. For instance, analysts indicate the core rate — which the central bank closely watches because it excludes volatility — will come in lower than the Bank of Canada’s forecast for 1.8% in the third quarter of 2010.
Taking into account that the central bank sets its policy rate in an effort to attain and maintain 2% inflation, these figures have analysts suggesting that the Bank of Canada might refrain from raising its benchmark rate again at its next meeting on Oct. 19.
The Bank of Canada has raised rates by 25 basis points at each of its last three meetings, as Canada recovered strongly from the recession. However, growth has ebbed as of late, due to a slowdown in the U.S. and global economies. Second-quarter GDP expansion was 2% annualized, down from the 5.8% reading in the first three months of 2010.
Read more:
http://www.financialpost.com
Canada’s International Transactions in Securities – July 2010
Statistics Canada has just released some excerpts from the July 2010 issue of Canada’s International Transactions in Securities (67-002-X), which will soon be made available.
Highlights
Non-residents added $5.5 billion of Canadian securities to their portfolios in July, on par with the amount acquired in June. Canadian bonds again accounted for the majority of foreign inflows. Meanwhile, Canadians sold $3.0 billion of foreign securities in July, mainly US federal government bonds.
Foreign investment in Canadian bonds slowed but remained robust at $5.2 billion in July. Foreign inflows were mainly the result of secondary market activity in Canadian dollar-denominated bonds. In July, the Canadian dollar rose 3.3 cents US, the second largest monthly appreciation since July 2009.
Non-residents added $3.9 billion of outstanding federal government bonds to their portfolios, with a concentration on shorter term-to-maturity instruments. In July, Canadian long-term interest rates exceeded those in the US by the widest differential since January 2009. Canadian private corporate bonds also attracted $1.7 billion of foreign inflows on secondary markets, driven by mortgage-backed securities.
In addition, non-residents purchased $966 million of Canadian money market instruments in July. Foreign investors placed $1.6 billion of funds in federal government Treasury bills, following a divestment of $2.2 billion in June. In July, the Bank of Canada raised its target overnight rate by another 25 basis points, the second rate increase since June. Meanwhile, non-residents continued to divest themselves of provincial paper for a seventh straight month.
Notes
All values in this release are net transactions unless otherwise stated.
The data series on international security transactions cover portfolio transactions in stocks, bonds and money market instruments for both Canadian and foreign issues.
Stocks include common and preferred equities, as well as warrants.
Debt securities include bonds and money market instruments.
Bonds have an original term to maturity of more than one year.
Money market instruments have an original term to maturity of one year or less.
Government of Canada paper includes treasury bills and US-dollar Canada bills.
Read More:
http://www.statcan.gc.ca/
Canadian Dollar Rebounds From 7-Week Low
Canada’s dollar rebounded from the weakest level in almost two months as stocks rose from the day’s lows, crude oil climbed and traders suggested recent declines were overdone.
One Canadian dollar purchased 94.38 U.S. cents in Toronto after slipping to 93.74 cents, the least since July 6. The currency rose 0.2 percent to close at C$1.0596 per U.S. dollar. It closed yesterday at C$1.0615.
The loonie, as the currency is sometimes known, earlier dropped as risk aversion drove global stocks lower and weakened the outlook for currencies tied to growth. It’s down 0.8 percent this year. A faltering economic recovery means the chances for further Bank of Canada interest-rate increases in 2010 are diminishing, dimming the currency’s appeal.
“It feels a little as if the impetus for higher rates in Canada beyond September is perhaps fading a little more,” Shaun Osborne, chief currency strategist in Toronto at Toronto- Dominion Bank’s TD Securities unit, wrote in an instant message.
Derivatives markets are “pricing in lower probabilities of future interest-rate hikes yet again,” Olga Dadabayeva, an currency analyst at Canadian Imperial Bank of Commerce, wrote in a note to clients, citing a 45 percent chance of a 25 basis point increase at next month’s meeting, and 5 percent for the October meeting.
Read more:
http://www.bloomberg.com/
The American Dream is Over
“I do believe in the American Dream,” said President Bush in 2002. “Owning a home is a part of that dream, it just is. Right here in America, if you own your own home, you’re realizing the American dream.”
Bush was echoing a theme that reaches back at least to Herbert Hoover: When the government encourages homeownership, the story goes, it strengthens individuals and communities and thereby fosters the American Dream.
Fast forward to 2010, and yesterday home sales in the U.S. broke a new record, plunging by 27% in July.
The U.S. housing market is at a point where it seems to be dragging the United States down as if the country were some hapless satellite of the old Soviet Union that refuses to face the facts. The game is over, the old regime is technically dead.
American home ownership, artificially created over decades by trillion-dollar government-backed loans, guarantees and regulation, continues to operate under the old rules. Somehow, the mess that Washington created is still thought of as the mess that Washington can still fix.
Millions of Americans face foreclosure, the value of their homes below the value of their nominal mortgages. Lenders are carrying mortgages that have little or no value, or writing them off. Foreclosures accounted for 22% of total house purchases in July.
The only real hope for a revival in the market is a return of buyers with confidence in the economy and in an environment where prices reflect the market rather than more government flim-flam support.
The American Dream, that has lured tens of millions of all nations to our shores in the past century has not been a dream of material plenty, though that has doubtlessly counted heavily. It has been a dream of being able to grow to fullest development as a man and woman, unhampered by the barriers which had slowly been erected in the older civilizations, unrepressed by social orders which had developed for the benefit of classes rather than for the simple human being of any and every class.
James Truslow Adams
“Epic of America”
Read more:
http://www.financialpost.com
http://www.marketoracle.co.uk