Daniel Wong

Canada's central bank may be moving a little faster than the market anticipates. The Bank of Canada (BoC) released its quarterly market participant survey (MPS) this morning.

The Canadian and American economies are closely intertwined and tend to perform similarly. Which makes sense, since the two countries have similar levels of affluence and strong cross border trade. Rarely do the two countries see much economic divergence, but this is one of those times. The Canadian economy is slowing much faster than the U.S., resulting in diverging monetary policies and inflation expectations. The result is bond yields for the two countries have formed the widest gap since the Asian Financial Crisis nearly 30 years ago. That means a lot of things won't be in Canada's favor, including the exchange rate.

The Greater Toronto real estate price boom continued to unwind last month. Toronto Regional Real Estate Board (TRREB) data shows the price of a composite benchmark (typical) home fell once again in October. Prices have now rolled back to where they were 3-years ago, falling nearly half the cost of a home just 10-years prior.

The Canadian economy is slowing down but some provinces are doing better than others. Statistics Canada (Stat Can) released annual provincial real gross domestic product (GDP) for 2023 this morning. The data shows 9 in 10 provinces grew, with those in the West showing the highest growth. When adjusted for the population, only half of the provinces are seeing a decline in growth—a trend that may reverse as rates fall and population is throttled.

Canadian rents are showing the first sign of weakness since the pandemic kicked off. A new report from Urbanation & rentals.ca shows the average rental price fell to $2,151 per month in October, down 1.2% since last year. It was the first year-over-year (y/y) drop since July 2021, with the 3-month trend showing annual growth […]

Canadians are getting used to spending more and getting less, even when it comes to building permits. Statistics Canada (Stat Can) data shows total building permits made monthly progress in September, nearing new highs in seasonally-adjusted nominal terms. Before getting too excited, this growth was almost exclusively driven by state stimulus which tends to have an inflationary impact. Inflation-adjusted data shows the real dollar value peaked earlier this year and has slid in recent months.

Canadian real estate prices continued its downtrend last month, printing even larger losses. Canadian Real Estate Association (CREA) data shows the price of a benchmark (typical) home fell in October, despite a surge in sales. Prices continued to grind lower and are now similar to where they were 3 years ago. Surging home sales are an encouraging sign of a return to market normalization, but several issues make it unclear if this trend will stick around.

Canadian inflation is picking up, surprising the market despite warnings the slowdown was temporary. Statistics Canada (Stat Can) data shows the Consumer Price Index (CPI) accelerated sharply in October. Experts largely reiterated their expectations of a double-rate cut by next month. However, the data used by the central bank to justify the last double-cut has shifted to tell the exact opposite story needed.

Canadian households sent another sign they're getting comfortable borrowing—the return of home equity loans. Statistics Canada (Stat Can) data shows the balance of home equity line of credit (HELOC) accounts, continued to climb in September. The segment went through a lull as higher rates and stricter lending standards motivated deleveraging. However, with the return of cheaper credit and bullish sentiment on real estate, households are once again tapping their HELOCs at a rate nearing mortgage credit growth.

Canadian politicians are in the holiday spirit and feeling generous with taxpayer funds ahead of election season.