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McLean's market musings for Nov 21


Blog by Nick Swinburne | November 21st, 2013


Weak factory numbers from Europe and China show that these major economies continue to plod along with weak prospects for improved growth coming anytime soon.  However, China recently announced a number of financial and social reforms that seem to be aimed at stimulating domestic economic growth.  These reforms range from allowing more private agricultural land sales, reducing differences in urban and rural social security to implementing environmental taxes.  However, the most newsworthy one is the easing of the famed “one child” rule.  This will eventually allow the demographics of the world’s most populous nation to become younger over time and spur domestic economic growth over the very long term.

In the US, manufacturing numbers were at an 8 month high while job numbers improved only slightly.  Inflation continues to be negligible and many forecasts have inflation staying low for the next year.

There has been increased speculation about when the Federal Reserve might begin to reduce the current quantitative easing stimulus program.  A review of notes from the October Fed meeting show that there is a chance that it might begin in December.  However, it is more widely believed that March is a more likely timeframe as job numbers need to improve much more and the extremely low inflation will not force the Fed to act sooner.

In Canada, reduced growth expectations lowered the Canadian dollar slightly and reinforced the view that the Bank of Canada will not change the Prime rate until 2015, if not later.  Bond yields are up slightly this week but most lenders are still tweaking rates slightly lower to compensate for raising the rates too high a few months ago.    Consumers are advised to get rate holds in place for potential purchases, refinances or renewals as a 120 day rate hold will last until mid-March.   This should be long enough to ride out the uncertainty of debt ceiling talks in January and any potential changes to the expected tapering timetable in the US.

Please remember that 80% financing is available for qualified US residents at great rates!

I am always available to assist you and your clients.

Cheers,
Jason

Jason McLean   BSc, AMP
The Mortgage Centre: Garibaldi Mortgage
www.garibaldimortgage.com
fax:  604-935-3390
cell:  604-935-9190