24 August 2010

According to the Associated Press, today it would take 12.5 months to sell all unsold homes on the market (4 million). The average home price is US$182,600 – it’s up 0.7% from a year ago.
RBC press release shows that even despite all the monthly employment level changes, 94% of the previously lost jobs have been recovered. It means there’s no more emergency in extremely low interest rates, that’s why the Bank of Canada raised the overnight rate by 50 bps (0.5%). Now it’s 0.75%.
The Bank is expected to continue this tendency with another 25 bps (0.25%) hike on September 8. But still the U.S. situation can influence Canada and the Bank of Canada will probably pause for a while in its rate hike cycle in the end of 2010.
It looks like Canada’s economy will continue to grow and all this uncertainty about the global outlook and the U.S. economy will disappear at the end of 2010, because the U.S. labour market is slowly recovering.