Tariff Appeal

A series of court rulings has thrown Donald Trump’s global trade war into legal battles.

The US CIT has ruled that “the Worldwide and Retaliatory Tariff Orders exceed any authority granted to the President by IEEPA to regulate importation by means of tariffs”.

That means the baseline 10% tariff, the reciprocal tariffs scheduled to take effect after the 90-day pause, the 20% fentanyl-related tariffs on China and the 25% fentanyl tariffs on non-USMCA compliant imports from Canada and Mexico are void.

What happens once the Trump administration appeals the ruling?

The case would first be taken up by the US Federal Court of Appeals and, if the administration loses that appeal, then potentially go to the Supreme Court.

Market Returns

May proved to be a “bounce-back” month after a negative, tariff-related sell off in April. Trump’s tariff announcements continued to dominate headlines this month and volatility did remain high.

Big Bank Reporting

Banks have released some feedback from what they saw in Q2 of this year. Slow purchase volume has caused banks to focus on renewal and switch in business.

Notable quotes from each bank are below.

• RBC – “Residential mortgage growth was largely supported by stronger client renewals and higher origination volumes driven by strong mortgage switch-in activity, partly offset by higher pay downs.”
• TD – “You see a flat average sequential growth on a spot basis, we’re actually up $1 billion quarter-over-quarter. So the growth is there. The profile was a little different this quarter where we had higher pay downs in January and February, but then we exited the quarter with momentum.”
• Scotiabank – “We had solid year-on-year growth – 6% and quarterly growth of 1% … We’re seeing the purchase volume coming down … and more switches.”
• BMO – “Overall on RESL, if I think about quarter-over-quarter we’re about 1% up and year-over-year we’re 6%. So we’re seeing some strong growth.”
• CIBC – “In our mortgage portfolio, there was a slight increase in ninety-plus-day delinquencies. We do not expect meaningful losses given the strong average loan-to-value in the book.”

NDP Party Status

NDP won’t get official party status.

Government House leader Steven MacKinnon said the NDP won’t be granted official party status, meaning the party won’t be guaranteed the power to ask questions during question period, hold committee seats, or receive the financial support given to official parties.

The NDP won seven seats in the last election, below the 12-seat threshold needed to secure official party status.

Policy Probabilities

Here’s how the market-implied next-meeting odds closed the week. The next B.O.C announcement is next week.

• For the Bank of Canada meeting on June 4:
  • 25 bps cut: 23% chance
  • No change: 77% chance
  •  
• For the Federal Reserve meeting on June 18:
  • 25 bps cut: 2% chance
  • No change: 98% chance

Inventory Surges

The latest data shows there are more than 16,000 homes listed for sale in Metro Vancouver (up 29.7% from last April)

In the GTA, there are 27,000 listings (up 54%).

Current Interest Rates

CONVENTIONAL

• 5 year fixed, 30 yr amortization – 4.39%
• 3 year fixed, 30 yr amortization – 4.35%
• 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 – 4.30%
• 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 – 4.04%
• 5 year variable, up to 30 amortization – Prime – .70% = 4.25%

Fast Facts

• 8,347 – Hudson’s Bay employees who will be let go by June 1, accounting for 89% of the company’s total workforce. All remaining stores will also be closed by that date.