HIGHLIGHTS OF THE WEEK – Feb 23
After a week of back and forth, an 11th hour deal between Greece and Eurozone finance ministers for a bailout extension was agreed on earlier today. However, details surrounding the specifics of the deal have yet to surface.
FOMC Minutes proved to be slightly more dovish than markets had anticipated, with the majority of participants agreeing that rates should be kept lower for longer. Yields moved sharply lower on the news, but later rebounded, with the 10-year ending the week 5bs higher at 2.06%.
U.S housing starts fell by -2.0% m/m in January, landing at 1.065 million units. Declines were concentrated entirely in the less volatile single-family segment, which fell by -6.7% m/m, while multi-family construction projects rose by +7.5% m/m.
Retail sales in December 2014 rounded out the Q4 Canadian economic data releases on a soft note, falling 2.0%. However, retail sales volumes for Q4 increase by 2.4% annualized, which likely supported modest real GDP growth of around 2.2% in the quarter.
Housing market data were also downbeat, as January 2015 existing home sales declined 3.1%, led by lower sales in Alberta and Saskatchewan.
Together, these data reinforce the current economic weakness in Canada ahead of the Bank of Canada Governor’s speech on Tuesday, February 24th. As such, we expect the Bank of Canada to remain dovish in its messaging, and to cut the overnight rate by an additional 25 basis points to 0.5% on March 4th.
For further information, please contact:
John Maveety Manager, Residential Mortgages – Greater Ottawa Area TD Canada Trust
T: (613) 371-1984 F: (888) 899-1984 P: (866) 767-5442