Latest news with #BoC
Yahoo
17 hours ago
- Business
- Yahoo
Uncertainty, volatility to continue to drive the housing market as Bank of Canada's June rate decision looms
The Bank of Canada's lengthy streak of interest rate cuts was expected to help stir the country's dormant housing market. But so far this year, the announcements and guidance from Canada's central bank have highlighted uncertainty in the economy — and underlined a deepening housing market paralysis. 'With looming tariffs and a lot of uncertainty in the market, with potential job losses and rising costs in many aspects of life, I think a lot of people are just really scared to take on a lot of debt,' said Victor Tran, a Toronto-based mortgage broker and Ratesdotca mortgage and real estate expert. Interest rates remain too high for many potential buyers, Tran says, "with fixed and variable rates mostly above four per cent — "still not low enough for buyers to enter the market.' Compounding this, affordability remains an issue. 'The buyers realize prices should come down,' Ron Butler, a mortgage broker at Butler Mortgage, told Yahoo Finance Canada. 'The sellers don't believe they should come down. So there are 25 to 30-year lows in activity.' The BoC is widely expected to hold its rate steady at 2.75 per cent Wednesday. But the housing market would likely remain "frozen" even in the event of an interest rate cut, Butler says — with any cut likely stemming from more weakness in the economy that will keep most potential buyers in a holding pattern. Those few who are buying right now tend to be extremely cautious, says Robert Saunders, founder of Ownright, a digital real estate legal services startup. 'What we're seeing from a first-time homebuyer point of view is generally, people are doing a lot more due diligence and bargaining more on the deals that they're doing.' First-time homebuyers 'don't want to catch a falling knife,' given that prices in some markets have dropped considerably, says Tran. In the Toronto condo market, for example, he says 'there's a good chance that by the time they take possession of it, let's say, two months from now, the value can be less than what they bought it for, and that's scary.' Mortgage business is nonetheless up this year, Butler says, largely because of the glut of owners renewing mortgages taken out at extremely low rates during the pandemic. For those renewing, the BoC's decisions still carry weight, with variable mortgage rates generally rising or falling with the Bank's overnight interest rate. Those who do have renewals coming up 'simply must shop,' Butler says. The major lenders waged a 'mortgage rate war' in the early spring, he says, competing for the limited pool of people buying in the near-stagnant spring market. But on renewals, the banks are far less aggressive, he says, knowing they can match another lender's offer to an existing customer — but only if the customer gets another offer. 'If you can't be bothered, you're just accepting the fact you're probably going to pay somewhere between $1,500 and $5,000 more over the course of your renewal period,' Butler said. 'Because if you have no ammunition to go back after your bank, they are never going to give you the best offer the first time.' Many also wait too long, Tran says, and may miss the window to process a transfer application. Most lenders will hold a rate for up to 120 days, he says. 'So start as early as possible, consult a mortgage professional, a mortgage broker, a mortgage specialist with a different bank, lock in a rate, and if the rates go down, that's great.' Starting early also makes sense given the economy's effects on the bond market, which determines fixed mortgage rates. Bond yields 'are profoundly erratic,' Butler says, possibly the most volatile he has seen in 30 years. The 'very big swings' in yields saw insured fixed-rate mortgages as low as 3.59 per cent in early April, Butler says. 'A lot of people locked in, and now we're back up into the fours,' he said, with 'very slim availability' of rates at 3.99.' Butler says rates are likely to come down again, with the BoC keenly aware of growing unemployment issues, especially in Ontario, and closely watching data on Canadians' credit health. But he cautions that there is likely a floor to mortgage relief in the months ahead, calling 'very, very low' odds of a mortgage rate in the high two per cent or low three per cent range. John MacFarlane is a senior reporter at Yahoo Finance Canada. Follow him on Twitter @jmacf. Download the Yahoo Finance app, available for Apple and Android. Error in retrieving data Sign in to access your portfolio Error in retrieving data Error in retrieving data Error in retrieving data Error in retrieving data
Yahoo
a day ago
- Business
- Yahoo
BofA sees strong Q1 growth keeping Bank of Canada on hold in June
-- Bank of America (NYSE:BAC) Securities expects the Bank of Canada to hold its policy rate at 2.75% in June, pointing to stronger-than-expected growth in the first quarter of 2025. In a research note published Friday, the firm said resilient GDP figures and sticky core inflation suggest the central bank will refrain from easing monetary policy for now. Canadian GDP rose 2.2% quarter-over-quarter annualized in Q1, topping both BofA's and the market's 1.7% forecasts. The outperformance was driven by a sharp 6.7% increase in exports, which analysts attributed to frontloading ahead of potential U.S. tariffs. 'Today's activity print not only showed that consumption weathered the initial shock from the trade war, but also that monthly GDP is holding up,' said Carlos Capistran, BofA's LatAm and Canada economist. He added, 'We expect the Bank of Canada (BoC) to leave its policy rate unchanged at 2.75% on June 4.' BofA revised its 2025 GDP forecast for Canada to 1.4%, up from 1.0%, citing the economy's underlying strength and revisions to 2024's baseline data. The firm maintained its 2026 growth forecast at 1.5%, while noting that risks remain balanced amid ongoing trade tensions and potential fiscal and monetary stimulus. Despite growth in net exports, final domestic demand declined by 0.1%, weighed down by a 3.0% drop in business investment. Consumption edged up just 0.8%, a performance Capistran suggested could reflect a 'Buy Canadian' sentiment emerging amid cross-border trade friction. March GDP rose 0.1% month-over-month, in line with expectations, with broad-based gains across both goods and services sectors. Initial estimates for April show similar momentum, reinforcing BofA's view that the economy remains more resilient than previously anticipated. 'Looking ahead, we believe that the outlook will become clearer, and that core inflation will be tamed by economic weakness,' Capistran said. He expects the BoC to begin cutting rates later this year, forecasting a year-end policy rate of 2.00%. While growth appears to have firmed for now, the strength of consumer behavior and export dynamics will be closely monitored as the trade conflict with the U.S. continues to evolve. BofA's outlook suggests the BoC remains in wait-and-see mode until further clarity emerges. Related articles BofA sees strong Q1 growth keeping Bank of Canada on hold in June Do foreign investors hold too much of US assets? Canada March GDP rises 0.1%; Q1 growth steady at 0.5%
The Market Online
2 days ago
- Business
- The Market Online
Market Open: Strong Commodity Gains Boost Canada's Main Stock Index
Canada's main stock index took a boost this morning, backed by strong commodity gains giving investors a reprieve ahead of the BoC rate decision later this week. Market Numbers (Futures) TSX :Up ( 0.20%) 26,227.40TSXV: Down (0.36%) 700.91DOW: Down (0.21%) 42,181.00NASDAQ: Up (0.70%) 21,258.75 FTSE: Up (0.13%) 8,784.05 In the Headlines: Ontario and Saskatchewan strike a deal to slash trade barriers, vowing freer flow of goods and labour. The move sets the stage for a high-stakes meeting with Prime Minister Mark Carney on economic unity And,As U.S. tariffs loom and inflation remains stubborn, the Bank of Canada is poised for a pivotal rate decision this week, balancing economic growth concerns with price stability mandates. Currencies Update: (Futures) The Canadian dollar is up 0.30% to $0.7321 US to the greenback, down against the Euro by 0.33% to $0.6370 and Bitcoin sheds 0.18% to $145,502.52 Commodities: (Futures) Natural Gas: Up (6.63%), 3.68WTI: Up (4.43%), 63.49Gold: Up (2.06%), 3,359.582 Copper: Up (0.58%) 6.02 To stay up-to-date on all of your market news head to Join the discussion: Find out what everybody's saying check out the rest of Stockhouse's stock forums and message boards. The material provided in this article is for information only and should not be treated as investment advice. For full disclaimer information, please click here
Yahoo
2 days ago
- Business
- Yahoo
Bank of Canada to hold rates at 2.75% but cut at least twice more this year: Reuters poll
By Mumal Rathore and Indradip Ghosh BENGALURU (Reuters) - The Bank of Canada will hold interest rates at 2.75% on Wednesday as policymakers await further news on an economy that grew faster than expected last quarter, with at least two more cuts likely this year, according to a majority of economists in a Reuters poll. That strong consensus around the upcoming decision came after data on Friday showed the economy grew quicker than predicted last quarter, at 2.2%. The surprising growth was primarily driven by exports as U.S. companies rushed to stockpile Canadian goods before U.S. President Donald Trump's tariffs kick in. Lower household spending and weak domestic demand, however, suggest a downturn is coming. Also, Trump's recent announcement he would double tariffs on imported steel and aluminum to 50% could further worsen the outlook. Still, solid economic growth in Q1 and core inflation flirting with the upper end of the BoC's 1-3% target range will provide ample reason for the central bank to hold rates this week for a second straight meeting. Over 75% of economists, 20 of 26, polled by Reuters said so following the gross domestic product data release. That is in line with interest rate futures pricing. "There isn't urgency from the growth numbers, and there is caution from the core inflation numbers," said Douglas Porter, chief economist at BMO Capital Markets, who expects the BoC to hold. "The overall GDP numbers have been surprisingly resilient. While the economy is certainly not as strong as the headline suggests, the reality is (that) it has managed to grind out some modest growth." Prior to the release, economists were unsure about the decision. Among top Canadian banks, BMO, CIBC and TD shifted their call to a pause from a cut while Scotiabank stood pat on their earlier view of no change. The BoC has already cut the rate by a cumulative 225 basis points since June 2024. Although there was no clear consensus on where rates would be by end-2025, nearly 75% of economists - 17 of 23 - said the BoC would cut rates at least twice more this year, including eight forecasting another two reductions, seven saying a further three cuts and two a further four. "While we would argue a cut would be the right step, odds are the BoC won't deliver one just yet, having signaled that it's less willing to be forward-looking amidst considerable uncertainty over the outlook," said Avery Shenfeld, chief economist at CIBC. "So we look for a pause (on Wednesday), but one accompanied by a message that leaves the door open for rate relief ahead." Last month, BoC Governor Tiff Macklem explicitly warned of a possible growth slowdown in coming quarters. But the BoC will refresh its economic outlook in July, which could be another reason to wait this week. The economy grew 0.1% in April, better than feared, but that is unlikely to be sustained. It will contract 1.0% and 0.5% this quarter and next, respectively, poll medians showed. If realised, that would meet the technical definition of a recession. "Whatever happens next, the BoC cannot assume the status quo will hold ... We believe Canadian growth is likely to slow sharply through the middle part of the year, justifying further rate cuts," said Andrew Kelvin, head of Canadian and global rates strategy at TD Securities. (Other stories from the Reuters global economic poll)
Daily Maverick
2 days ago
- Business
- Daily Maverick
Asia shares, dollar slip as tariff tensions darken mood
Nikkei slips, S&P futures weighed by risk-off mood Dollar down before jobs data, steel levies deadline ECB seen cutting rates, BoC on hold Oil bounces on relief OPEC did not raise output even further By Wayne Cole SYDNEY, June 2 (Reuters) – Asian share markets and the dollar made a soft start on Monday as US-China trade tensions continued to simmer, while investors turned defensive ahead of key US jobs data and a widely expected cut in European interest rates. There was little obvious reaction to President Donald Trump's threat late Friday to double tariffs on imported steel and aluminium to 50%, beginning on June 4, a sudden twist that drew the ire of European Union negotiators. Speaking on Sunday, Treasury Secretary Scott Bessent said Trump would soon speak with Chinese President Xi Jinping to iron out a dispute over critical minerals. Beijing then forcefully rejected Trump's trade criticism, suggesting a call might be some time coming. White House officials also continued to play down a court ruling that Trump had overstepped his authority by imposing across-the-board duties on imports from U.S. trading partners. 'The court ruling will complicate the path ahead on trade policy, but there remains an ample set of provisions available to the administration to deliver its desired results,' said Bruce Kasman, chief economist at JPMorgan. 'There is a commitment to maintaining a minimum US tariff rate of at least 10% and imposing further sector tariff increases,' he added. 'An increase in ASEAN to discourage transhipment looks likely, and the bias for higher tariffs on US-EU trade persists.' Markets will be particularly interested to see if Trump goes ahead with the 50% tariff on Wednesday, or backs off as he has done so often before. In the meantime, caution reigned and MSCI's broadest index of Asia-Pacific shares outside Japan went flat. Japan's Nikkei fell 1.4%, while Hong Kong dropped 2.5%. South Korean stocks edged up 0.2% on hopes a snap presidential election on Tuesday would deliver a clear winner. EUROSTOXX 50 futures dipped 0.2%, while FTSE futures and DAX futures were little changed. S&P 500 futures eased 0.4% and Nasdaq futures lost 0.5%. The S&P had climbed 6.2% in May, while the Nasdaq rallied 9.6% on hopes final import levies will be far lower than the initial sky-high levels. Front-running the tariffs has already caused wild swings in the economy, with a contraction in the first quarter likely turning into a jump this quarter as imports fall back. The Atlanta Fed GDPNow estimate is running at an annualised 3.8% for April-June, though analysts assume this will slow sharply in the second half of the year. Data this week on US manufacturing and jobs will offer a timely reading on the pulse of activity, with payrolls seen rising 130,000 in May while unemployment stays at 4.2%. EYEING UNEMPLOYMENT A rise in unemployment is one of the few developments that could get the Federal Reserve to start thinking of easing policy again, with investors having largely given up on a cut this month or next. A move in September is seen at around a 75% chance, though Fed officials have stopped well short of endorsing such pricing. There are at least 11 Fed speakers on the diary for this week, led by Fed Chair Jerome Powell later on Monday. Fed Governor Christopher Waller did say on Monday that cuts remain possible later this year as he saw downside risks to economic activity and employment and upside risks to inflation from the tariffs. A softer jobs report would be a relief for the Treasury market, where 30-year yields continue to flirt with the 5% barrier as investors demand a higher premium to offset the ever-expanding supply of debt. The Senate this week will start considering a tax-and-spending bill that will add an estimated $3.8 trillion to the federal government's $36.2 trillion in debt. Across the Atlantic, the European Central Bank is considered almost certain to cut its rates by a quarter point to 2.0% on Thursday, while markets will be sensitive to guidance on the chance of another move as early as July. The Bank of Canada meets Wednesday and markets imply a 76% chance it will hold rates at 2.75%, while sounding dovish on the future given the tariff-fuelled risk of recession there. Widening rate spreads have so far offered only limited support to the US dollar. 'The greenback remains near the lower end of its post-2022 range and considerably weaker than interest rate differentials would imply,' noted Jonas Goltermann, deputy chief markets economist at Capital Economics. 'Sentiment around the greenback remains negative and it continues to look vulnerable to further bad news on the fiscal and trade policy fronts.' On Monday, the dollar slipped 0.3% on the yen to 143.55, while the euro edged up 0.2% to $1.1370. The greenback even fell 0.2% on the Canadian dollar to 1.3727, getting no tailwind from Trump's threat of 50% tariffs on Canadian steel exports. In commodity markets, gold firmed 0.6% to $3,310 an ounce, having lost 1.9% last week. Oil prices bounced after OPEC+ decided to increase output in July by the same amount as it did in each of the prior two months, a relief to some who had feared an even bigger increase. Brent rose $1.60 to $64.38 a barrel, while US crude gained $1.74 to $62.53 per barrel.
