We have a shortened edition of the Week that Was in advance of the BC Day long weekend. I’m also writing from Montreal where we are visiting family and enjoying the 30c+ weather. The overall tone of the markets is risk-off with equity markets selling off and bond markets rallying as bond yields drop. Oil is also softer with gold showing strength.
| Index | Close July 25th 2024 | Close Aug 1st 2024 |
| S&P500 | 5,459 | 5,447 |
| TSX60 | 22,608 | 22,723 |
| Canada 10 yr. Bond Yield | 3.37% | 3.07% |
| US 10 yr. Treasury Yield | 4.25% | 3.93% |
| USD/CAD | $1.38192 | $1.38852 |
| Brent Crude | $82.37 | $79.52 |
| Gold | $2,364 | $2,446 |
| Bitcoin | $65,658 | $65,231 |
Source: Trading Economics & Factset
Last week’s rate cut by the Bank of Canada pushed down the value of the Loonie, as was expected. This week there was a glimmer of hope as the US Federal Reserve is now talking about a rate cut in September. The markets are starting to price in 2 more rate cuts by the Bank of Canada this year. Well known economist David Rosenberg says that the Bank needs to be more aggressive in its cuts if we are to avoid deflation.
Overseas, the Bank of England made its first rate cut in 4 years. Inflation (CPI) has fallen to 2% in the UK because of the “Old Lady of Threadneedle Street’s” tight monetary policy. The Bank is also playing a bit of catch-up with the European Central Bank which has already cut 25bps.
There was a change in the Canadian mortgage market this week. 30-year amortization mortgages are now a thing for first time home buyers. There are a lot of caveats on who will qualify, so the overall effect on affordability may be muted. For those in the most expensive markets, it will be hard to qualify, but those buying in smaller markets may have an advantage. The extra 5 years will increase the total cost of borrowing though.
Bitcoin is becoming a (minor) election issue in the US with musing of a “Bitcoin Reserve” coming from the Republicans. Some of Donald Trump’s largest donors are from the crypto space, so it’s not hard to see where the pressure is coming from. While he hasn’t matched Robert Kennedy Jr.’s more aggressive stance to increase the Federal Reserve’s holdings, he says the Treasury should not be selling what it currently holds. The Treasury’s holdings are currently seized coins that were the proceeds of crime.
This year our trip to Montreal includes my grandson Alex (13 yrs.). It is his first visit to the city, and it has been a real pleasure exploring the city and sampling what it has to offer. A big change from small town Vancouver Island. Some of the highlights have included biking the Lachine Canal, visiting the markets, and the Biodome at the Olympic Parc. If you are in Montreal, the Biodome is very cool, and worth visit.
It’s now time to get ready to head up to Ferme Neuve for a weekend in small-town Quebec. On that note I’ll leave you with another tune from Le Vent du Nord…. Enjoy your long weekend
Russ Lazaruk, RIAC, CIWM, CIM, FCSI
Managing Director & Portfolio Manager
