Canadian Headline Inflation

Headline inflation dropped to well under expectations. However, without the carbon tax adjustment, we’d be looking at something closer to 2.5%.

• Year-over-year: 1.74% (est. 1.6% | prior 2.3%)
• Month-over-month: -0.1% (est. -0.2% | prior 0.3%)

Canadian Core Inflation

The trouble lies with Core Inflation. Strip away the volatile data, and underlying inflation grew more concerning.

• Year-over-year: 3.15% (est. 2.9% | prior 2.85%)
• 3-month annualized rate: 3.60%

These new data sets do not provide immediate relief for borrowers. Yields are surging, and rate cut odds are fading. “After a weak jobs report handed the Bank a good reason to cut, this back-up in core above 3% pretty much washes that away,” BMO Economics reported.

US Inflation Undershoots Expectations

The tariff wars aren’t blowing up U.S. prices just yet, at least not based on April’s official data. But economists are bracing for impact.

This report gives the Fed no compelling reason to alter its current stance.

• CPI m/m: 0.2% (est. 0.3% | prior -0.1%)
• CPI y/y: 2.3% (est. 2.4% | prior 2.4%)
• Core CPI m/m: 0.2% (est. 0.3% | prior 0.1%)
• Core CPI y/y: 2.8% (est. 2.8% | prior 2.8%)

Policy Odds For June

Tuesday’s inflation numbers have altered the chances of a June BoC cut.

New implied odds are below:

• For the Bank of Canada meeting on June 4:
  • 25 bps cut: 31% chance
  • No change: 69% chance
  •  
• For the Federal Reserve meeting on June 18:
  • 25 bps cut: 5% chance
  • No change: 95% chance

Trade War Slows Real Estate

Fresh CREA figures confirm that Canada’s housing sector is once again an innocent bystander in a geopolitical fight, this time its courtesy of Trump’s tariff war.

• Sales: -7.5% y/y (17% below the 10-year average)
• Average price: $679,866 (+0.2% m/m and -3.9% y/y)
• Benchmark price: $689,200 (-1.2% m/m and -3.4% y/y)
• Inventory: 5.06 months (10-year average: 4.15 months)

Challenges in Down Payment

It now takes 6 years to save for a 20% down payment on the average home, says Desjardins Economics. The bad news is, it requires saving 20% of one’s disposable income.

Unemployment in Young Canadians

Young Canadians are struggling to find work in what’s become the worst summer job market in over two decades. According to new data from Indeed, job postings in early May were down 22% from last year.

Last month, the unemployment rate for Canadians aged 15 to 24 surpassed 14%. For recent grads, it hit 11.2% in the first three months of 2025 — the highest rate in over 20 years outside of the pandemic.

Moody Cuts US Credit Rating

For the first time since it started rating U.S. bonds in 1993, debt rating agency Moody’s has dropped the country below AAA. The move matches the credit ratings of S&P and Fitch.

The American government’s debt is a growing concern.

Current Interest Rates

CONVENTIONAL

• 5 year fixed, 30 yr amortization – 4.39%
• 3 year fixed, 30 yr amortization – 4.59%
• 2 year fixed, 30 yr amortization – 4.84%
• 5 year variable, 30 yr amortization – Prime – 0.40% = 4.55%
• 5 year fixed, 25 yr amortization – 4.29%
• 3 year fixed, 25 yr amortization – 4.49%
• 2 year fixed, 25 yr amortization – 4.74%
• 5 year variable, 25 yr amortization – Prime – 0.50% = 4.45%

INSURED

• 5 year fixed, up to 30 yr amortization – 4.19%
• 4 year fixed, up to 30 amortization – 4.24%
• 3 year fixed, up to 30 amortization – 4.14%
• 5 year variable, up to 30 amortization – Prime – .70% = 4.25%

Fast Facts

• 6 – The number of years it would take to save a 20% down payment for an average-priced home in Canada, assuming average income and 20% put aside for the payment.
• $187,800,000- How much Members of Parliament spent last year on expenses, a record high. MPs spent around $114,000,000 on staff salaries and $32,000,000 on travel.
• $136,000,000- Credit losses that buy-now-pay-later company Klarna reported last quarter, asign that more consumers are failing to pay back the loans on time.
• 2,000 – Roughly how many employees TD is laying off, equivalent to 2% of its workforce. The layoffs come as the bank restructures following its record anti-money laundering settlement.