Paul Ferley
Paul Ferley
canada commodity seems support
Canada seems to be getting support from strengthening commodity prices.
changed closing due favorable gap historical housing increases indicative largely market pressures prices quarters quickly rather relative rising second seems situation third
Housing prices nationally were rising largely due to favorable fundamentals rather than to speculative pressures that would be indicative of a housing market bubble. However, the situation seems to have changed recently. Affordability has deteriorated significantly in the second and third quarters of 2005 as housing price increases have spiked higher. As a result, affordability is quickly closing the gap relative to this measure's long-run historical average.
evident expected fed housing saw shipments starts strength stronger
The day saw some offsetting developments with strength evident in U.S. housing starts and the Philadelphia Fed index and in Canada, a stronger than expected manufacturing shipments report.
below bubble close conditions expectation gains growth housing increases moderate mortgage present price prices rates recent require rising sharp since slow soon start thus
Bubble conditions may not be present yet but are approaching such and thus require close monitoring going forward. To allay this concern, housing price increases will need to start to moderate soon from recent sharp increases. Our expectation is that this should occur, since rising mortgage rates should slow the growth in housing prices to a rate below gains in income.
bank buy canada canadian higher inflation interest investors labor market raise rate rates taking
The labor market is getting too tight, so the Bank of Canada may have to raise the rate more aggressively to keep inflation from taking hold. Higher interest rates get investors to buy the Canadian dollar.
bank canada flag further markets move outlook poised rate sidelines tomorrow waiting whether
Markets are probably waiting for the announcement by the Bank of Canada tomorrow to get a sense of the characterization of the near-term outlook for policy: whether they'll flag they're poised to move to the sidelines or whether they're still contemplating further rate hikes.
bottom core inflation line
Bottom line is it's not flagging any inflation pressures, at least on a core basis.
exception generally indication move paid prices provides saw strength
We saw most of the indicators move up in the month, with the exception of the prices paid index, which generally provides an indication of strength in activity.