TSX + 252.19 to 11,848.75 (CP) enjoyed the biggest single-day gain of 2012
reaching a near two-month high, as mining and energy shares soared on hopes
major central banks will ease policy to revive a world economy hit hard by
Europe's debt crisis. A raft of weak economic data raised expectations that the
European Central Bank will cut interest rates to a record low on Thursday, a
move that could drive stock markets higher and further lift commodities. Better
fill your tank today!
DOW +72.43 to 12,943.82 .helping buying sentiment was strong data on U.S.
vehicle sales last month. Automakers reported big gains over June of last year.
Chrysler posted its best June in five years. Sales surged at Volkswagen, which is
on track for its best year in the U.S. since 1973.
Dollar +.55c to 98.77c US
Oil +$3.91 to $87.66US to the highest level since May on renewed fears of a
military conflict with Iran.
Gold +$24.10 to $1,621.80 US
Canadian 5 year bond yields markets +.02 to
1.26
The spread
(subtracted from the industry average 5 yr rate published mortgage rate of 3.19%) is
nearing the bottom of a lender or investors desired profitability range at
1.93,
Lenders will be watching closely as they are much quicker to increase rates
when spreads are shrinking than decrease when they’re widening.
If the
increase in bond yield continues upward, the spread shrinks, which could prompt interest
rates to rise
. The range for investor desired profitability is currently in the region of 1.90 and
2.10
http://www.bloomberg.com/quote/GCAN5YR:IND
Economists predict Bank of Canada will
stay on hold until July 2013
By Alexandra Posadzki, The Canadian Press
The Bank of Montreal predicted Tuesday that the Bank of Canada will keep its key
interest rate low for longer than it expected.
Economists at the bank are now predicting that the central bank will not raise its key
rate until July 2013, six months later than their earlier prediction of January 2013.
The rate affects the prime lending rates at banks and in turn influences all kinds of
interest rates including those charged to variable rate mortgages and lines of credit.
But BMO mortgage expert Laura Parsons urged prospective home buyers to choose
fixed-rate mortgages, which are also near record lows.
"While interest rates have been at historic lows, the inevitable climb will happen," said
Parsons. "Choosing a fixed mortgage can provide protection against rising rates and
make the cost of owning a home more manageable in the long run."
Senior economist Michael Gregory said the change in outlook stems from the easing
policy of the U.S. Federal Reserve, a downgraded Canadian economic outlook and
tightened mortgage rules.
"The weaker U.S. economy, which is causing the Fed to ease in the first place, does
ripple across the border and directly impacts Canada, through trade channels and things
like that," said Gregory.
Ottawa moved last month to tighten mortgage rules for the fourth time in as many
years in an effort to cool the housing market.
The changes, which come into effect on July 9, include a cut to the maximum
amortization period for government insured mortgages cut to 25 years from 30.
Bank of Canada governor Mark Carney has called household debt one of the biggest
threats to the Canadian economy.
The new rules should stem some fears around growing household debt that would
otherwise push the Bank of Canada to increase rates sooner.
"The tightening of the government's mortgage insurance rules does serve to act like
higher interest rates specifically for that sector," Gregory said. "So that takes some of
the urgency away from the Bank of Canada to adjust rates any time soon."
The Bank of Canada has kept its key interest rate at one per cent since September 2010.
Gregory said he expects that the Bank of Canada will change its projections for
economic growth when it releases its new monetary policy report on July 18.
In its last policy report in April, the central bank predicted 2.4 per cent annual growth to
the Canadian economy this year and next.
"I suspect [the policy report] will show softer growth in Canada, partly because of global
factors and in part because of what's going on in the U.S.," said Gregory.
http://ca.finance.yahoo.com/news/bank-montreal-predicts-bank-canada-
190302169.html
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