02-10-2023, 08:58 AM
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#1001
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Franchise Player
Join Date: Dec 2006
Location: Calgary, Alberta
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I think this is the interesting part of the release and the article. Wage growth is declining, but of course Tiff and the BoC want to see that lower yet. I still lean toward a pause because it's coming down, but of course the question is whether it's coming down fast enough for them.
Quote:
In Canada, average hourly wages rose 4.5 per cent in January, down from 4.8 per cent in December, after months of persistent growth of more than 5 per cent. Earlier this week, Macklem said wage growth running in the range of 4 per cent and 5 per cent isn’t consistent with getting inflation back to the 2 per cent target unless productivity growth is surprisingly strong.
The blowout gains in January pushed the employment rate — the percentage of people aged 15 and older who are employed — to 62.5 per cent, a level last observed in April and May 2019. Employment growth last month was driven by women and men in their prime working years, and in both private and public sectors.
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02-10-2023, 09:36 AM
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#1002
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Franchise Player
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I hope these rate hikes stop soon
My mortgage payment has gone up over $400/M in less than a year
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02-10-2023, 10:19 AM
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#1003
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Franchise Player
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Quote:
Originally Posted by Slava
This is interesting to me on a few fronts. First, there is some pretty strong evidence that the rate increases are not entirely reducing inflation, but adding to it. This doesn't apply in all sectors, and there is a net benefit, to be clear. But one are where it might be working against the central bank is housing because the rate increases obviously increase the financing, which pushes rents up at the same time. This is adding about 0.5% to the inflation rate, which is obviously not helpful.
The second part I find interesting is that with unemployment rates holding well, and companies clearly reluctant to lay off workers that they've had a difficult time in finding in the first place, it suggests the soft-landing is still in play. Typically a recession would see job losses and a rise in unemployment, which we really aren't seeing at all. GDP has also remained positive and strong. Basically despite all kinds of heuristics and such, the economy has tolerated the rate hikes and remains resilient for the most part. Interesting times.
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More jobs with no change in unemployment implies a change in the labour force, probably by increased participation.
Economic growth from people who weren't previously working (maybe because of covid concerns?) seems like a good thing to me and is likely not inflationary.
Increased labour force participation could also be a symptom of inflation (eg some people who didn't need to work before like stay-at-home parents or seniors) getting jobs to cope with the increased cost of living. That seems less positive to me, but is still disinflationary.
Edited to add: immigration is probably also increasing the size of the labour force. Not sure how that affects inflation. Probably disinflationary to wages and inflationary to housing.
Last edited by bizaro86; 02-10-2023 at 10:25 AM.
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02-10-2023, 10:37 AM
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#1004
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Franchise Player
Join Date: Dec 2006
Location: Calgary, Alberta
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Quote:
Originally Posted by bizaro86
More jobs with no change in unemployment implies a change in the labour force, probably by increased participation.
Economic growth from people who weren't previously working (maybe because of covid concerns?) seems like a good thing to me and is likely not inflationary.
Increased labour force participation could also be a symptom of inflation (eg some people who didn't need to work before like stay-at-home parents or seniors) getting jobs to cope with the increased cost of living. That seems less positive to me, but is still disinflationary.
Edited to add: immigration is probably also increasing the size of the labour force. Not sure how that affects inflation. Probably disinflationary to wages and inflationary to housing.
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Yeah and those are the things that are mentioned in that article as well.
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02-10-2023, 11:00 AM
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#1005
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Powerplay Quarterback
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This jobs report combined with the US saying they are not pausing on raising rates makes me think that the BOC is going to re-think taking a pause on increasing rates. We'll see.
It is funny how people's opinions are so biased based on their personal situation. Personally, I have no consumer debt and my mortgage is fixed for another 3.5 years. However, inflation is kicking my butt with the increased cost of goods and services. Also, my employment is not dependent on cheap money. So if raising interest rates can help combat inflation, I'm all for it.
On the other hand, people who gambled on variable-rate mortgages, have been snorting cheap consumer debt, or are in industries fueled by cheap money feel the direct pinch of interest rate hikes.
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02-10-2023, 11:10 AM
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#1006
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Scoring Winger
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Quote:
Originally Posted by albertGQ
I hope these rate hikes stop soon
My mortgage payment has gone up over $400/M in less than a year
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I'm up $1,150/mo since Feb 22 if it makes you feel any better.
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02-10-2023, 11:11 AM
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#1007
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Franchise Player
Join Date: Dec 2006
Location: Calgary, Alberta
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Quote:
Originally Posted by pseudoreality
This jobs report combined with the US saying they are not pausing on raising rates makes me think that the BOC is going to re-think taking a pause on increasing rates. We'll see.
It is funny how people's opinions are so biased based on their personal situation. Personally, I have no consumer debt and my mortgage is fixed for another 3.5 years. However, inflation is kicking my butt with the increased cost of goods and services. Also, my employment is not dependent on cheap money. So if raising interest rates can help combat inflation, I'm all for it.
On the other hand, people who gambled on variable-rate mortgages, have been snorting cheap consumer debt, or are in industries fueled by cheap money feel the direct pinch of interest rate hikes.
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This is where things really start to get concerning for the market overall in Canada. A lot of people locked in mortgages in 2020 and it looks like when they start renewing in 2025 that rates are going to be substantially higher than where they were a couple years ago.
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02-10-2023, 11:22 AM
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#1008
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Franchise Player
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Quote:
Originally Posted by The Fisher Account
I'm up $1,150/mo since Feb 22 if it makes you feel any better.
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It does a little bit.
Just kidding
Man, that is a huge increase. I don't think I could manage an increase that high.
You must live in a mansion.
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02-10-2023, 11:23 AM
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#1009
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Powerplay Quarterback
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Quote:
Originally Posted by Slava
This is where things really start to get concerning for the market overall in Canada. A lot of people locked in mortgages in 2020 and it looks like when they start renewing in 2025 that rates are going to be substantially higher than where they were a couple years ago.
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I've been telling my wife for the last three mortgages that when it is time to renew things will be a lot more expensive as money can't stay this cheap for this long. Up until now, I've been wrong, but it didn't hurt to be wrong in this case.
Personally, I'll probably be able to take the hit and keep my amortization where it is, but worst case scenario I'll refinance. It's the people that have taken out all their equity in LOCs that are really going to be in a tight spot.
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02-10-2023, 12:34 PM
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#1010
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Franchise Player
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Quote:
Originally Posted by Slava
Yeah and those are the things that are mentioned in that article as well.
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Sorry, Ive used all my free Bloomberg views for the month so could only read the intro paragraph...
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02-10-2023, 01:10 PM
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#1011
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Lifetime Suspension
Join Date: Jul 2012
Location: North America
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02-10-2023, 01:26 PM
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#1012
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Franchise Player
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3.3%; haven't seen levels that high since way, way back in January.
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02-10-2023, 01:33 PM
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#1013
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Franchise Player
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Quote:
Originally Posted by Slava
This is where things really start to get concerning for the market overall in Canada. A lot of people locked in mortgages in 2020 and it looks like when they start renewing in 2025 that rates are going to be substantially higher than where they were a couple years ago.
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Most people have a decent enough runway to prepare for that. Most people will see wage growth over those 5 year spans (even if it doesn't keep up with inflation it's almost certainly still improved relative to your borrowed principal).
I'd think it's harder on anyone caught with their renewal in the last 6/next 6 months
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02-10-2023, 02:09 PM
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#1014
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First Line Centre
Join Date: Nov 2010
Location: Sunnyvale
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Quote:
Originally Posted by albertGQ
I hope these rate hikes stop soon
My mortgage payment has gone up over $400/M in less than a year
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Quote:
Originally Posted by The Fisher Account
I'm up $1,150/mo since Feb 22 if it makes you feel any better.
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Crazy. What did your rates move from, to?
__________________
The only thing better then a glass of beer is tea with Ms McGill
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02-10-2023, 02:46 PM
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#1015
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#1 Goaltender
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Quote:
Originally Posted by bizaro86
More jobs with no change in unemployment implies a change in the labour force, probably by increased participation.
Economic growth from people who weren't previously working (maybe because of covid concerns?) seems like a good thing to me and is likely not inflationary.
Increased labour force participation could also be a symptom of inflation (eg some people who didn't need to work before like stay-at-home parents or seniors) getting jobs to cope with the increased cost of living. That seems less positive to me, but is still disinflationary.
Edited to add: immigration is probably also increasing the size of the labour force. Not sure how that affects inflation. Probably disinflationary to wages and inflationary to housing.
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anecdotally, I just hired someone who exited the labor market 3 years ago and just decided to re-enter. So I at least contributed 1 number out of 150,000 that contributed to your original thought.
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02-10-2023, 03:11 PM
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#1016
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Scoring Winger
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Quote:
Originally Posted by Derek Sutton
Crazy. What did your rates move from, to?
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I was at 1.45 last year and today it’s 5.7%.
Great time to have my wife on mat leave LOL
Last edited by The Fisher Account; 02-10-2023 at 03:13 PM.
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02-10-2023, 05:45 PM
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#1017
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Franchise Player
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Quote:
Originally Posted by Derek Sutton
Crazy. What did your rates move from, to?
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I went from 1.10% to 5.35%
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02-10-2023, 09:30 PM
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#1018
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Franchise Player
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Quote:
Originally Posted by The Fisher Account
I was at 1.45 last year and today it’s 5.7%.
Great time to have my wife on mat leave LOL
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One thing to keep in mind is all the extra money you put down on your mortgage over however long you have been doing variable off sets the interest rate hike today.
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02-28-2023, 12:34 AM
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#1019
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First Line Centre
Join Date: Feb 2014
Location: Uzbekistan
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I’ve read that the Fed will likely continue to raise interest rates. This is going to cause our currency to go even lower vs the USD which means imports from the U.S (aka food) will continue to get more expensive here.
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02-28-2023, 05:36 AM
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#1020
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Lifetime Suspension
Join Date: Jul 2012
Location: North America
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Quote:
Originally Posted by Johnny199r
I’ve read that the Fed will likely continue to raise interest rates. This is going to cause our currency to go even lower vs the USD which means imports from the U.S (aka food) will continue to get more expensive here.
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“Why inflation in the U.S. is a problem for the Bank of Canada”
https://ca.finance.yahoo.com/news/wh...jZ9hKREL0pLdjl
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