Buy? Sell? Should Canadians buy into real estate or not? On the plus side, interest rates remain at historic lows coupled with reduced unemployment, may encourage more Canadians into the market. And when they start looking, they’ll find that prices in most regions still haven’t recovered to their pre-recession highs. The drawback is knowing interest rates have only one direction to go-up. Today’s low 5 year fixed rate of 3.59% can provide security in that area of uncertainty for your on-the-fence clients.
- TSX +83.96 to 13,188.94 (CP) its third consecutive day of solid gains as traders took in stronger than expected inflation data and news that Greece had passed an austerity bill that should help Athens avoid defaulting on its debt. The surprisingly strong inflation results could put pressure on the Bank of Canada to take a more hawkish tone on inflation in the next interest rate announcement in less than three weeks. The bank had warned it expected inflation to push above three per cent during the spring, but few expected it would hit such elevated levels
- DOW +72.73 to 12,261.42
- Dollar +1.27c to 103.03c USD
- Oil +$1.88 to $94.77USD per barrel Oil and gold prices appear to have moved past recent lows, a trend that bodes well for the performance of the resource-heavy TSX . Over two days, oil has recovered the loss from last Thursday when the United States and other oil-importing countries said they would dump emergency oil supplies onto the market
- Gold +$10.40 to $1510.20USD per ounce
- Canadian 5 yr bond yields markets +.15bps to 2.30. That’s an increase of 30bps since Monday! The spread (based on the MERIX 5 yr rate published rate of 3.79%) is now down to the middle of the comfort zone at 1.49 as money moves away from bonds to stocks. The spread based on the quick close of 3.59% is well below the bottom of the comfort zone at 1.29 and is at risk of ending. http://www.tmxmoney.com/HttpController?GetPage=BondsAndRates&Language=en
The rate of return on your bond, can be read through a yield curve, If the increase in bond yield continues to go up, the spread will continue to shrink and this could be a trigger for interest rates to rise. 1.40 and 1.60