Weekly Digest

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October 19th, 2023

Inflation Cools

Inflation was expected to remain flat at 4.00%, but a strong report this week showed a slowdown to 3.80%.

This has moved the needle on a Bank of Canada increase from a 50/50 chance, to only 15% as of today. We are all hoping for a pause next week as (more on the chart below) we are still in the most aggressive rate tightening cycle in the last 40 years.

Shelter costs (mortgage and rent) continue to run high and represent over 28% of the CPI basket.

Inflation in the US and in Canada are now at par.

Middle East Conflict

Expect volatility in the interest rate market over the coming months. With the ongoing war in the middle east, and inflation numbers still running high, we will see mini peaks and valley for rates moving forward.

Crude Oil

Oil remains a hard resource to predict with the Israel conflict. Before the crisis, we were seeing price relief into the low $80/per barrel, but supply fears have now drifted oil back up to 85$/barrel again.

Jobs Report

Canadian and US jobs reports are in, and the numbers continue to run at higher levels than expectations.

Canada added 63,000 jobs which was 20,000 higher than expectations. Many of these jobs are part time employment opportunities representing 48,000 of the 63,000 additions (76%). The underlying job trend is therefore much weaker than advertised and if many of these individuals are being forced to add a part time job to pay their bills, that is a further sign of a weak economy.

In the US, 336,000 were added which is 170,000 more than expectations. The US economy continues to pick up steam and the 10 year treasury yield soared by 60 basis points.

Current Interest Rates

CONVENTIONAL

• 5 year fixed, 30 yr amortization – 6.44%

• 3 year fixed, 30 yr amortization – 6.81%

• 5 year variable, 30 yr amortization – Prime – 0.20% = 7.00%

• 5 year fixed, 25 yr amortization – 6.34%

• 3 year fixed, 25 yr amortization – 6.71%

• 5 year variable, 25 yr amortization – Prime – 0.30% = 6.90%

INSURED

• 5 year fixed, 25 yr amortization – 5.94%

• 4 year fixed, 25 yr amortization – 6.04%

• 3 year fixed, 25 yr amortization – 6.49%

• 5 year variable, 25 yr amortization – Prime – .90% = 6.30%

Fast Facts

• 27% – The percentage of Canadians that reported using cannabis over the past year. It was 14.8% before legalization five years ago.

• 104 – That’s the age of Dorothy Hoffner, who completed a tandem jump from 13,500 feet in Illinois this week. Hoffner is hoping to be certified as the oldest person to ever skydive, breaking 103-year-old Swede Linnéa Ingegärd’s record set in 2022.