After months of trepidation and worrying about how much housing values might weaken due to the Bank of Canada’s aggressive rate hikes and their overall financial situations, a new poll finds Canadians’ expectations have steadily, if slowly, improved in recent weeks..“The Bloomberg-Nanos Canadian Confidence Index (BNCCI), a weekly measure of economic expectations and financial health, registered at 48.38 during the week ending March 10,” reports Canadian Mortgage Professional (CMP)..“This contrasted with the 45.56 reading seen four weeks prior, although it still remained markedly lower than the 12-month high of 58.36.”.In the report, Nik Nanos, chief data scientist at Nanos Research said, “Over the last number of weeks of tracking in the BNCCI, sentiment has been improving and is nearing 50 which would be a neutral score on the 100-point diffusion index.” .“The positive trend has been largely driven by more positive views of real estate values, which are up about 11 points in four weeks.".According to the report, the share of Canadians expecting an increase in housing prices over the next six months was 31.22%, a noticeable improvement from 29.18% the week prior and 19.72% four weeks prior to that..The report also found 15.75% of Canadians expect a stronger national economy in the coming six months, an improvement from 14.75% last week, although 47.59% still anticipate weaker performance and 30.01% believe the economy will remain stagnant during this period..CMP also reports there may be some good news coming out of the sudden collapse of the Silicon Valley Bank (SVB) and subsequent US federal bailout..In a similar move, the Office of the Superintendent of Financial Institutions took over SVB’s Canadian arm on March 12, with OSFI’s superintendent Peter Routledge, saying it's planning to wind down SVB’s Canadian operations, reports CMP..“By taking temporary control of the Canadian branch of Silicon Valley Bank, we are acting to protect the rights and interests of the branch’s creditors,” Routledge said. “I want to be clear: The Silicon Valley Bank branch in Canada does not take deposits from Canadians and this situation is the result of circumstances particular to Silicon Valley Bank in the United States.”.Analysts point to the US Fed’s interest rate increases as one of the main drivers of the collapse..As a result, the Bank of Canada and the US Fed could pivot on their intentions on holding or further increasing their respective rates..Prior to the collapse, Canadian markets were pricing in at decent odds of a .25% cut at the Bank of Canada’s next rate announcement on April 12 and then at least another .5% cut by mid-summer, reports CMP..However, at the beginning of this week, markets were pricing a 40% chance of a Bank of Canada cut next month, with a “near certainty” of a cut by August. Indicators also pointed to the US Federal Reserve similarly reassessing its rate trajectory, The Globe and Mail reported..If an April cut does happen, it would be the first cut to the rate since April 2020, at the beginning of the pandemic.
After months of trepidation and worrying about how much housing values might weaken due to the Bank of Canada’s aggressive rate hikes and their overall financial situations, a new poll finds Canadians’ expectations have steadily, if slowly, improved in recent weeks..“The Bloomberg-Nanos Canadian Confidence Index (BNCCI), a weekly measure of economic expectations and financial health, registered at 48.38 during the week ending March 10,” reports Canadian Mortgage Professional (CMP)..“This contrasted with the 45.56 reading seen four weeks prior, although it still remained markedly lower than the 12-month high of 58.36.”.In the report, Nik Nanos, chief data scientist at Nanos Research said, “Over the last number of weeks of tracking in the BNCCI, sentiment has been improving and is nearing 50 which would be a neutral score on the 100-point diffusion index.” .“The positive trend has been largely driven by more positive views of real estate values, which are up about 11 points in four weeks.".According to the report, the share of Canadians expecting an increase in housing prices over the next six months was 31.22%, a noticeable improvement from 29.18% the week prior and 19.72% four weeks prior to that..The report also found 15.75% of Canadians expect a stronger national economy in the coming six months, an improvement from 14.75% last week, although 47.59% still anticipate weaker performance and 30.01% believe the economy will remain stagnant during this period..CMP also reports there may be some good news coming out of the sudden collapse of the Silicon Valley Bank (SVB) and subsequent US federal bailout..In a similar move, the Office of the Superintendent of Financial Institutions took over SVB’s Canadian arm on March 12, with OSFI’s superintendent Peter Routledge, saying it's planning to wind down SVB’s Canadian operations, reports CMP..“By taking temporary control of the Canadian branch of Silicon Valley Bank, we are acting to protect the rights and interests of the branch’s creditors,” Routledge said. “I want to be clear: The Silicon Valley Bank branch in Canada does not take deposits from Canadians and this situation is the result of circumstances particular to Silicon Valley Bank in the United States.”.Analysts point to the US Fed’s interest rate increases as one of the main drivers of the collapse..As a result, the Bank of Canada and the US Fed could pivot on their intentions on holding or further increasing their respective rates..Prior to the collapse, Canadian markets were pricing in at decent odds of a .25% cut at the Bank of Canada’s next rate announcement on April 12 and then at least another .5% cut by mid-summer, reports CMP..However, at the beginning of this week, markets were pricing a 40% chance of a Bank of Canada cut next month, with a “near certainty” of a cut by August. Indicators also pointed to the US Federal Reserve similarly reassessing its rate trajectory, The Globe and Mail reported..If an April cut does happen, it would be the first cut to the rate since April 2020, at the beginning of the pandemic.
