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Time for your cheat sheet on this week’s top stories.
Canadian Real Estate
Canada Just Saw The Largest Foreign Investor Sell Off Ever
Canada’s stock markets have been left out of the global boom in equities. Rather than buying everything in sight, investors have been dumping their Canadian holdings. Now we finally know who’s selling—foreign investors. Traditionally, the country is viewed as a safe haven for foreign capital and provides a “flight to safety” that helps boost its local economy. Now they’re net sellers, withdrawing significant capital. They aren’t alone—domestic investors are also sending their capital abroad as they see fewer opportunities at home.
Bank of Canada Likely To Cut Rates Before The US Due To Weak Economy
The Canadian and American economies are tightly integrated and tend to move together. As a result, so is monetary policy—with rate cuts and hikes tending to move in sync. That may no longer be the case as Canada’s highly indebted households struggle to keep up with the country’s largest trade partner. Consequently, at least one major bank sees the Bank of Canada (BoC) cutting rates ahead of the US central bank. Traders aren’t quite on board with that call though, pricing the odds at a 50-50 coinflip.
Canadian Inflation Slows, At Target When Mortgage Interest Is Excluded
Canadian borrowing costs will come down when inflation moderates further. There’s just one problem—inflation is elevated by the inclusion of interest costs. Mortgage interest is now a major driver of headline CPI, which falls to the 2-point target when excluded. The EU and US economies don’t include mortgage interest in their calculations, helping to avoid the circular logic Canada appears to have introduced on its own. Whoops!
Canadian Mortgage Fraud Rampant At HSBC, Lawmaker Demands Investigation
A prominent investigative reporter found widespread mortgage fraud allegations at HSBC Canada. Now a Canadian lawmaker wants to know why the Government didn’t address any of these issues during its review of the bank’s sale to RBC, the country’s largest financial institution. He’s now demanding a thorough investigation into the matter and requesting RBC put aside $100 million in funds to cover any resulting fines.
Canadian Mortgage Credit Continues To Slow, Credit Card Debt Surges
Canadians may not be borrowing for mortgages, but they’re still borrowing—a lot. The annual rate of mortgage credit growth has fallen to the lowest level in two decades. However, high-interest credit card debt is starting to accumulate at a rapid rate. In a country where the cost of shelter is consuming income much more rapidly than wages are growing, borrowing on credit cards may be the only short-term option to help make ends meet. If that’s the case, this issue is going to get a lot worse before it gets better.
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