HIGHLIGHTS OF THE WEEK – Aug. 6
- A number of macroeconomic indicators this week have provided additional signals that the U.S. economy continues to improve. Financial markets took these as further evidence supporting the case for the Federal Reserve to start reducing its monthly asset purchases in September 18.
- As a result, 10-year U.S. Treasury yields have climbed another 20 basis points on the week, reaching 2.78%. U.S. equity markets have also sold off; the S&P 500 is down 1.8% since last Friday.
- Since Chairman Bernanke first suggested on May 22nd that the Fed could start tapering this Fall, financial markets have been fixated on what and when the central bank will do. The looming expiration of the current Continuing Resolution and the need to raise the statutory debt limit will elicit more attention in the coming weeks.
- One year following the federal government tightened mortgage insurance regulations, the existing home market has fully recovered
- In July, existing home sales were up 9.0% from year ago levels and home prices rose 8.1% from year ago levels. From a regional perspective, strength in Greater Toronto, Greater Vancouver, Calgary and Edmonton was offset by weakness in Montreal and most major urban areas in the Atlantic Provinces.
- Overall, while the housing market has shown some signs of revival in recent months, activity is likely to be tempered by rising interest rates and the market is still expected to achieve its soft landing.
- In other news, manufacturing shipments fell 0.5% in July – a fourth decline in 6 months. In real terms, sales were down an even larger 1.3%.
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) 767-5446