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McLean's market musings for Nov 7

Blog by Nick Swinburne | November 7th, 2013

The European Central Bank dropped the benchmark interest rate by 0.25% in an effort to further stimulate economic growth in the region.  This move was also made to combat the growing potential for deflation, as recent numbers showed an inflation rate of only 0.7%, the lowest it has been in 4 years.

In the US, 3rd quarter economic growth came in at 2.8% which was far greater than everyone expected.  Most analysts expected growth closer to 2% so this a huge surprise.  Improvement in exports, consumer spending and housing growth all contributed to the increased output.  Labour numbers also improved for the quarter.  Despite this improvement, the Federal Reserve is still not expected to begin tapering the Quantitative Easing stimulus program until 2014.    The markets are still watching for developments  regarding the new deadline for current government spending on January 15th, and the new debt ceiling deadline on February 7th.

Bond yields increased roughly 10 basis points across the board over the past week.  Yields are still below levels seen a month ago but the improved US economic picture suggests that yields may be returning to an upward trend.  Fixed term mortgage rates should remain steady in the short term but consumers are advised to obtain rate holds to protect against the possibility of increasing rates in December and January.

The Canadian dollar has been trending slightly downward over the past week and currently sits just under $0.96.  Many analysts expect the dollar to continue a slow decline for the remainder of the year although the performance of the US economy will be the determining factor for future moves.

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

Jason McLean

Jason McLean BSc, AMP
The Mortgage Centre: Garibaldi Mortgage
fax: 604-905-3801
cell:  604-935-9190