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Brent Richardson
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Ground Level Updates on Mortgages and the Housing Market, before it hits the news
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Financial markets are fully pricing a 0.25% BoC cut on Sept 17, with a 90%+ chance of an additional cut in 2025
Fixed mortgage rates are positioned to drop 0.05-0.10% over the next 1-2 weeks
Only a surprise boost in CPI on Sept 16 could derail these odds before the BoC meets
BREAKING: 🇨🇦 shed 66,000 jobs in August, with unemployment increasing by 0.2% to 7.1% and exceeding expectations of 7% unemployment
Bond yields dipped on the news adding slight negative pressure to fixed mortgage rates and increasing the likelihood of a Sept BoC cut to ~70%
This is the definition of broken:
In 15 days, the Fed will cut rates for the first time in 2025, yet the 30Y Treasury Yield is now near 5.00%.
We have RISING interest rates as markets "price-in" Fed interest rate CUTS.
Do you realize what's happening?
(a thread)
Chances of a BoC cut on Sept 17 increased to 50% as labour and GDP data were weaker than markets expected
However the BoC expected the GDP tumble leading BMO to state: ‘For the BoC theres nothing here screaming for a Sept cut’
The BoC decision will likely hinge on Aug CPI data
BREAKING: 🇨🇦 real GDP plummeted in Q2, shrinking by 0.4% driven by a sharp 7.5% drop in 🇺🇸 exports
The damage is here, but not as bad as originally expected in June
Bond yields are down marginally on the news, with no upward fixed mortgage rate pressure currently
Dovish hints for a 🇺🇸 Fed cut have many north of the border hoping BoC will follow in Sept
However BoC is likely to hold until 🇨🇦 economic deterioration pulls the BoC preferred, core inflation measure below 3%
Current market odds dont offer much reward (.25%) for VRM risk
BREAKING: 🇨🇦 CPI/ headline inflation fell by 0.2% in July to 1.7% lead by lower gasoline prices
However excluding gas, inflation was 2.5%, matching the May and June readings
The 🇨🇦 5 yr yield is down ~1% on the news
🇺🇸 treasuries/bonds increased on an inflationary surge in PPI to 3.7%, its fastest since Mar '22
This pushed 🇨🇦 bonds higher, dampening hopes of lower fixed rates near term
🇨🇦 headline inflation is expected to hold at 1.9% on Tues, with core inflation measures closer to 3%
Bond markets seemingly shrugged off the biggest 🇨🇦jobs market decline in over 3 years, with yields down just a touch
No upward pressure on fixed rates currently, but we'll need to see another ~ (-) .20 lower yields to see fixed rates dip meaningfully
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