Calgary Alberta Mortgage and Real Estate News

The Bank of Canada today announced that it is maintaining its target for the overnight rate at 4 1/4 per cent. The operating band for the overnight rate is unchanged, and the Bank Rate remains at 4 1/2 per cent.The Canadian and global economies are evolving broadly in line with the Bank’s expectations as set out in the January Monetary Policy Report Update (MPRU). Real gross domestic product in Canada increased in the fourth quarter of 2006 at a rate consistent with the Bank’s projection in the MPRU, and both total CPI and core inflation have been largely as expected. At the end of 2006, the Canadian economy is judged to have been operating at, or just above, its production capacity.

The Bank’s outlook for output and inflation in Canada remains essentially unchanged from the MPRU. The Canadian economy is expected to continue to operate near its production capacity through 2007 and 2008. Total CPI inflation should average just above 1 per cent in the first half of 2007, returning to the 2 per cent target in 2008. Core inflation should remain near 2 per cent throughout this period.

Despite recent volatility in global financial markets, the Bank continues to judge that the risks to its inflation projection are roughly balanced. The main downside risk continues to be that growth in the U.S. economy could be lower than expected. The main upside risk continues to be that household spending in Canada could be stronger than expected, largely because of borrowing against increased home equity.

In line with the Bank’s outlook, the current level of the target for the overnight rate is judged, at this time, to be consistent with achieving the inflation target over the medium term.

The Bank will present a full and updated analysis of economic and financial developments, trends, and risks in the Monetary Policy Report, to be published on 26 April 2007.

The economy picked up in the final month of 2006, offering a kick-start to this year and indicating the Bank of Canada will hold the line on interest rates next week.Gross domestic product grew by 0.4 per cent in December, slightly below the consensus prediction of economists, but fourth-quarter growth as a whole came in at a better-than-expected 1.4 per cent.

Statistics Canada said Friday that the pace of economic activity eased slightly in the final quarter and GDP — the total of goods and services produced in the country — advanced 2.7 per cent over the full year.

Growth in December was largely driven by higher personal expenditure and the strengthening of exports. Both the service and the goods-producing industries expanded, with manufacturing, wholesale and retail trade posting the strongest gains.

Automotive products, which rose 7.7 per cent over the fourth quarter, were the main driver in the higher export numbers. Construction, financial services and tourism-related industries also advanced.

The gains were partly offset by slackness in the energy sector and in the agriculture and forestry industries.

Coming on top of other rosy statistics — job creation in January was a strong 88,000 — the December GDP figures had analysts predicting a good start to 2007.

“The fact that the economy ended the quarter on such a strong footing points to a good hand-off for the first quarter of 2007 and could set the stage for a three per cent gain,” said Marc Levesque, chief economic strategist at TD Bank.

Carolyn Kwan, an economist at Scotia Capital, said there was a lot of good news in Friday’s data.

“The final domestic demand was actually a lot stronger than expected, particularly because we saw all of the weakness in the GDP report come from the inventory side,” she said.

“So actually, when we looked forward to the first quarter we could even expect a bit of a boost to production because inventories . . . have been drawn down.”

“Canada’s economy remains relatively healthy,” said David Tulk, a TD Bank economist.

“Canada’s external sector appears to be recovering well as exports rose by 4.8 per cent, marking the second quarter of increase following two quarters of declines.”

Dawn Desjardins, a senior economist at Royal Bank, said the bounce in December growth is a good sign.

“January reports were strong with both employment and housing starts showing sharp gains, supporting our view that the economy is building momentum,” she said.

The Bank of Canada ’s next scheduled interest rate announcement comes Tuesday and the economists said it’s almost certain to leave its key rate at 4.25 per cent, where it has been since last May.

The bank’s growth forecasts recently have been almost bang-on, leaving little need for a shift in rates.

Canada’s dollar declined the most in almost a year this week as stock markets slumped worldwide, and concern mounted that slowing global growth will reduce demand for Canada’s commodity exports.The currency extended its losses as a report showing economic growth slowed last quarter fueled speculation the Bank of Canada will lower interest rates this year. Commodities account for 54 percent of Canada’s exports.

“The Canadian dollar is underperforming on weaker commodity prices,” said Steve Malyon, a currency strategist at Scotia Capital Inc. in Toronto. “Tuesday’s meltdown in China’s equity market sparked a wider market route that saw investors seek shelter in relatively safe assets.”

The Canadian dollar dropped 1.5 percent to 84.94 U.S. cents in Toronto, the biggest weekly drop since September 2006. One U.S. dollar buys C$1.1773.

Investors this week sold commodity-linked currencies such as the New Zealand dollar against the yen to unwind so-called carry trades, where they borrow cheaply in Japan and invest in countries with higher yields. Japan’s benchmark rate is 0.5 percent, the lowest among industrialized nations.

“Canada is also getting swept up in this noise,” said Jack Spitz, director of currency trading at National Bank of Canada in Toronto. “We’re seeing some weakness in the commodity markets, and currencies that are linked to commodities and linked to the risk are being sold off amidst unwinding of carry trade.”

Yen Rout

The Canadian dollar also declined this week by the biggest amount in more than 7 years against the yen. It lost 5 percent against the Japanese currency, to 99.21 yen. It had dropped 5.11 percent during the week ended on Aug. 20, 1999.

A slump in Chinese shares on Feb. 27 led to a global rout of equities and emerging market assets this week, pushing traders to sell investments financed in yen to repay loans and seek haven in U.S. government debt.

Gross domestic product in Canada, the world’s eighth- largest economy, grew at an annualized 1.4 percent rate last quarter, down from 2 percent in the third, Statistics Canada said yesterday. It was the slowest growth rate in more than three years.

The yield on December bankers’ acceptances futures fell to 4 percent on the Montreal Exchange, from 4.11 percent yesterday, and 4.26 percent on Feb. 26.

Rate Cut Speculation

Bankers’ acceptances futures have settled at a three-month lending rate averaging 16 basis points, or 0.16 percentage point, above the central bank’s rate target since Bloomberg started tracking the difference in 1992.

“The market suspects that the bank will cut rates at least one time this year,” said Dustin Reid, a senior currency strategist in Chicago at ABN Amro Bank Inc. “The Canadian dollar in the short-run will be influenced more by unwinding of carry trades, speculative interest, and oil prices than the domestic factors.”

The Bank of Canada has kept its benchmark lending rate unchanged since lifting it to 4.25 percent in May, saying the economy is in a “mild slowdown.” Central bankers’ next rate- setting meeting is March 6.

The yield on Canada’s benchmark 10-year note fell 10 basis points, or 0.10 percentage point, to 4 percent. The price of the 4 percent bond due June 2016 rose 79 cents to C$100.1. Bond yields move inversely to prices.

Canadian bonds have underperformed U.S. Treasuries this year on speculation the Federal Reserve will be more aggressive than the Bank of Canada in cutting borrowing costs.

The yield premium, or spread, on 10-year U.S. Treasury notes over Canadian 10-year notes shrank to the lowest in about a year. It touched 51 basis points yesterday, the lowest since March 2006.

Canada’s dollar declined the most in almost a year this week as stock markets slumped worldwide, and concern mounted that slowing global growth will reduce demand for Canada’s commodity exports.The currency extended its losses as a report showing economic growth slowed last quarter fueled speculation the Bank of Canada will lower interest rates this year. Commodities account for 54 percent of Canada’s exports.

“The Canadian dollar is underperforming on weaker commodity prices,” said Steve Malyon, a currency strategist at Scotia Capital Inc. in Toronto. “Tuesday’s meltdown in China’s equity market sparked a wider market route that saw investors seek shelter in relatively safe assets.”

The Canadian dollar dropped 1.5 percent to 84.94 U.S. cents in Toronto, the biggest weekly drop since September 2006. One U.S. dollar buys C$1.1773.

Investors this week sold commodity-linked currencies such as the New Zealand dollar against the yen to unwind so-called carry trades, where they borrow cheaply in Japan and invest in countries with higher yields. Japan’s benchmark rate is 0.5 percent, the lowest among industrialized nations.

“Canada is also getting swept up in this noise,” said Jack Spitz, director of currency trading at National Bank of Canada in Toronto. “We’re seeing some weakness in the commodity markets, and currencies that are linked to commodities and linked to the risk are being sold off amidst unwinding of carry trade.”

Yen Rout

The Canadian dollar also declined this week by the biggest amount in more than 7 years against the yen. It lost 5 percent against the Japanese currency, to 99.21 yen. It had dropped 5.11 percent during the week ended on Aug. 20, 1999.

A slump in Chinese shares on Feb. 27 led to a global rout of equities and emerging market assets this week, pushing traders to sell investments financed in yen to repay loans and seek haven in U.S. government debt.

Gross domestic product in Canada, the world’s eighth- largest economy, grew at an annualized 1.4 percent rate last quarter, down from 2 percent in the third, Statistics Canada said yesterday. It was the slowest growth rate in more than three years.

The yield on December bankers’ acceptances futures fell to 4 percent on the Montreal Exchange, from 4.11 percent yesterday, and 4.26 percent on Feb. 26.

Rate Cut Speculation

Bankers’ acceptances futures have settled at a three-month lending rate averaging 16 basis points, or 0.16 percentage point, above the central bank’s rate target since Bloomberg started tracking the difference in 1992.

“The market suspects that the bank will cut rates at least one time this year,” said Dustin Reid, a senior currency strategist in Chicago at ABN Amro Bank Inc. “The Canadian dollar in the short-run will be influenced more by unwinding of carry trades, speculative interest, and oil prices than the domestic factors.”

The Bank of Canada has kept its benchmark lending rate unchanged since lifting it to 4.25 percent in May, saying the economy is in a “mild slowdown.” Central bankers’ next rate- setting meeting is March 6.

The yield on Canada’s benchmark 10-year note fell 10 basis points, or 0.10 percentage point, to 4 percent. The price of the 4 percent bond due June 2016 rose 79 cents to C$100.1. Bond yields move inversely to prices.

Canadian bonds have underperformed U.S. Treasuries this year on speculation the Federal Reserve will be more aggressive than the Bank of Canada in cutting borrowing costs.

The yield premium, or spread, on 10-year U.S. Treasury notes over Canadian 10-year notes shrank to the lowest in about a year. It touched 51 basis points yesterday, the lowest since March 2006.

Canada’s economic growth in the fourth quarter was the slowest in more than three years, as manufacturers sold their inventories to meet demand and consumer spending eased.Gross domestic product growth in the world’s eighth- largest economy eased to an annualized 1.4 percent rate between October and December, from a revised 2 percent pace in the third quarter, Statistics Canada said today in Ottawa. Economists predicted fourth-quarter growth would slow to 1.2 percent from an initially reported 1.7 percent rate, according to the median of 27 estimates in a Bloomberg News survey. The Canadian economy experienced what Bank of Canada Governor David Dodge called a “mild” slowdown at the end of last year, caused by a strong currency and weaker U.S. demand. An anticipated turnaround this year may keep the central bank from lowering interest rates to bolster demand, economists say. The economy rebounded in December to grow at its fastest pace in a year, Statistics Canada also said today. “We saw some weakness come through on the consumer side and we had some notable slowdown in some of the manufacturing categories” last year, Carolyn Kwan, an economist at Scotia Capital Inc. in Toronto, said before today’s report. “Our outlook is relatively positive” for coming months, she said. The next decision for the central bank, which has left the benchmark lending rate at 4.25 percent since last May, is on March 6. Canadian interest-rate futures due in June show investors don’t expect a change in the 4.25 percent rate. The yield on the June bankers’ acceptance contract was 4.24 percent yesterday on the Montreal Exchange. December GDP On a monthly basis, the economy grew 0.4 percent in December, up from a revised pace of 0.3 percent in November. Economists had predicted output to grow 0.5 percent during the month, from initially reported November growth of 0.2 percent. Canada’s economy grew 2.7 percent during all of 2006 from the previous year, below the 2.8 percent pace at which the central bank says the economy can grow without sparking inflation. The central bank predicted in January that output would grow by 1.5 percent in the fourth-quarter and 2.7 percent for the whole year, down from a pace of 2.9 percent in 2005. Consumer spending on goods and services, which makes up almost 60 percent of GDP, advanced at an annualized 3.1 percent rate between October and December, down from 5.1 percent in the third quarter. The central bank predicts consumer spending growth will wane in coming years, making up 60 percent of GDP growth in 2008, down from more than 80 percent in 2006. Business Investment Non-farm businesses drew down C$748 million ($636 million) in inventories during the quarter to meet demand, deducting almost a full percentage point from growth during the three-month period, the statistics agency said. Investment by businesses, which includes spending on residential construction as well as machinery and equipment, advanced 3.9 percent, from the third quarter’s 3.2 percent annualized pace. Non-residential construction rose 10.5 percent, from 10.4 percent in the third quarter. Exports rose 4.8 percent in the fourth quarter, while imports, a deduction from the GDP measures, declined 0.6 percent. Government spending slowed to 1.8 percent in the fourth quarter, from 2 percent in the prior three months.

Canada’s economy skidded in the fourth quarter of 2006, but a bounce in December suggests a modest upturn early this year that may give the Bank of Canada comfort in keeping interest rates steady.Statistics Canada said annualized quarterly growth in gross domestic product eased to 1.4 percent in the fourth quarter from a revised 2.0 percent in the third quarter on a sharp draw-down in business inventories as well as weakness in the manufacturing, energy and wholesale sectors.

Statscan revised its third-quarter growth figure from the 1.7 percent it estimated earlier.

The fourth quarter was Canada’s weakest quarterly performance since the second quarter of 2003, when the economy contracted 1.3 percent. But economists took a “glass half-full” view of the report because growth sped up in each consecutive month of the period.

“Definitely there are at least some grounds for optimism in the data we saw today out of Canada,” said Doug Porter, deputy chief economist at BMO Capital Markets.

The Bank of Canada is due to announce its next interest-rate decision on Tuesday and it is widely expected to keep its key rate steady at 4.25 percent.

Analysts had expected 1.3 percent annualized growth in the October-December period as auto makers and other exporters took a hit from the U.S. slowdown. The Bank of Canada had projected 1.5 percent growth in its January monetary policy report.

The Canadian dollar <CAD=> spiked briefly after the data but then steadied at around C$1.1742 to the U.S. dollar, or 85.16 U.S. cents. Bond prices extended earlier gains.

2007 LOOKING BETTER

December appeared to be a turning point for the economy, which has been dragged down by the U.S. housing slowdown and weak net exports. Gross domestic product expanded 0.4 percent in the month, the highest monthly rate in 2006.

Statscan revised its November growth figure to 0.3 percent from 0.2 percent and the October rate to 0.1 percent from zero.

Canada’s dollar fell to the lowest in three weeks and government bonds rose as a report showing economic growth slowed last quarter fueled speculation the central bank will lower interest rates.The currency has dropped 1.48 percent this week as stock markets slumped worldwide and concern mounted that slowing global growth will reduce demand for Canada’s commodity exports. The decline is the biggest weekly decrease since June.

“The market suspects that the bank will cut rates at least one time this year,” said Dustin Reid, a senior currency strategist in Chicago at ABN Amro Bank Inc. “The Canadian dollar in the short-run will be influenced more by unwinding of carry trades, speculative interest, and oil prices than the domestic factors.”

The Canadian dollar dropped to 84.94 U.S. cents at 4:14 p.m. in Toronto from 85.29 U.S. cents yesterday, touching the lowest since Feb. 9. One U.S. dollar buys C$1.1770.

Gross domestic product in the world’s eighth-largest economy grew at an annualized 1.4 percent rate last quarter, down from 2 percent in the third, Statistics Canada said today. It was the slowest growth rate in more than three years, as manufacturers sold inventories to meet demand and consumer spending eased.

Rate-Cut Speculation

The yield on December bankers’ acceptances futures fell to 4.02 percent on the Montreal Exchange, from 4.11 percent yesterday, and 4.26 percent on Feb. 26.

Bankers’ acceptances futures have settled at a three-month lending rate averaging 16 basis points, or 0.16 percentage point, above the central bank’s rate target since Bloomberg started tracking the difference in 1992.

The Bank of Canada has kept its benchmark lending rate unchanged since lifting it to 4.25 percent in May, saying the economy is in a “mild slowdown.” Central bankers’ next rate- setting meeting is March 6.

Investors this week sold commodity-linked currencies such as the New Zealand dollar against the yen to cut so-called carry trades, where they borrow cheaply in Japan and invest in countries with higher yields. Japan’s benchmark rate is 0.5 percent.

“Canada is also getting swept up in this noise,” said Jack Spitz, director of currency trading at National Bank of Canada in Toronto. “We’re seeing some weakness in the commodity markets, and currencies that are linked to commodities and linked to the risk are being sold off amidst unwinding of carry trade.”

Yen Rally

The Canadian dollar has declined this week by the biggest amount in more than seven years against the yen. It lost about 5 percent against the Japanese currency, to 99.29 yen today. It had dropped 5.11 percent during the week ended on Aug. 20, 1999.

Strategists at RBC Capital Markets advised investors to buy the Canadian dollar against the Australian and New Zealand currency because Canada’s current-account surplus makes it less vulnerable to a drying of global liquidity.

Receipts from outside Canada exceeded payments sent abroad by C$2.99 billion ($2.54 billion) in the fourth-quarter, from the previous quarter’s C$5.76 billion, Statistics Canada reported yesterday.

“The Canadian dollar is less sensitive to foreign investor preferences,” wrote David Watt, a senior currency strategist at RBC, in a note to clients today. “Australia and New Zealand rely on foreign portfolio to fund their current-account deficits.”

The yield on Canada’s benchmark 10-year note fell 3 basis points to 3.9 percent. The price of the 4 percent bond due June 2016 rose 25 cents to C$100.06. Bond yields move inversely to prices.

Canadian bonds have underperformed U.S. Treasuries this year on speculation the Federal Reserve will be more aggressive than the Bank of Canada in cutting borrowing costs.

The yield premium, or spread, on 10-year U.S. Treasury notes over Canadian 10-year notes shrank to the lowest in about a year. It touched 51 basis points today, the lowest since March 2006.

MLS(R) sales and new listings came in strong for
the month of February 2007, according to figures released by the Calgary Real
Estate Board.
    February combined residential sales totaled 3,348, a 9.66 per cent
increase over February 2006 when sales were recorded as 3,053, and a 27.25 per
cent increase from January 2007, when the sales were 2,631. The breakdown of
the February 2007 combined sales was, 2,319 single-family residences, 1,011
condominium, and 18 mobile homes. February 2006 sales in the same categories
were, 2,152; 895; and 6, respectively.
    February 2007 saw 3,731 new listings coming to the market, an increase of
15.62 per cent from February 2006, when the new listings were 3,227, and
showing a decrease of 6.96 per cent from last month’s 4,010 new listings.
    The average combined residential sale price for February 2007 was
$393,307 a 29.14 per cent increase over February 2006, when the average price
was $304,550, and a 4.7 percent increase over the January 2007 average price
of $375,646. Broken out, the following is a comparison of single-family,
condominium, and mobile home average sale prices for the month of February
2007 over 2006: single-family $435,802 / $342,412; condominium $301,777 /
$215,301; mobile home $59,556 / $37,417.
    Condominium sales in February maintained a steady pace with 1,011
condominiums changing hands. This is a 12.96 per cent increase over February
2006, when the condominium sales were 895 and a 21.22 per cent increase over
last month’s sales of 834. The average price of a condominium in February 2007
was $301,777, an increase of 40.17 per cent from the same period last year,
when the average price was $215,301 and a 5.55 per cent increase over
January’s average price of $285,918.
    “With February statistics now on record, it is clear that our strong
balanced market is going to continue,” explained CREB(R) President, Ron
Stanners. “With sales 9% above February 2006 numbers, it would appear that we
are heading into a stronger market than last year. Our saving grace is that we
have almost twice as many residential listings at the end of February this
year as compared to February 2006. This should keep our market balanced, but
anticipate prices moving up through March. This is where the true value of a
REALTOR(R) can help you whether you are buying or selling. Contact your
REALTOR(R) for professional assistance,” concluded Stanners.
    Average price information can be useful in establishing trends over time,
but does not indicate actual prices in centres comprised of widely divergent
neighbourhoods or account for price differentials between geographical areas.
The median price is determined by selecting the middle number of total sale
prices - the combined residential median for February 2007 was $363,000; up
35.45 per cent from February 2006, when the median price was $268,000 and up
7.72 per cent from last month’s median of $337,000.

The Canadian dollar closed
lower against the U.S. dollar on Thursday due to a combination
of a narrower than expected Canadian current account surplus
and further unwinding of carry trades.

 Domestic bonds prices finished mostly higher as investors fled riskier assets in favor of safe-haven fixed income.
 The Canadian dollar closed at C$1.1727 to the U.S. dollar, or 85.27 U.S. cents, down from C$1.1698 to the U.S. dollar, or 85.48 U.S. cents, at Wednesday’s close.
 Weaker gold prices yanked the commodity-sensitive Canadian unit lower overnight, while surprisingly weak fourth-quarter current-account data helped knock it down further against the U.S. dollar.
 According to Statistics Canada, the current account surplus unexpectedly fell to a three-year low of C$2.99 billion, which was half that expected by analysts in a Reuters poll.
 And with investors resuming the unwinding of carry trades — bets on high-yielding currencies largely at the expense of the yen — the Japanese managed to rise to its highest level against the Canadian dollar since December.
 ”The noise is still in terms of the unwinding of the carry trade and the Japanese yen continues to be the outperformer,” said Jack Spitz, director of foreign exchange at National Bank Financial.
 ”The appetite for risk is being taken off the table and short currencies like the Japanese yen and low yielding currencies are being taken back, while other currencies are being shorted.”
 The Canadian dollar, now sitting at its lowest level against the U.S. unit in nearly three weeks, spent the session in a range of between C$1.1708 and C$1.1751.
 Traders will now look to Canada’s fourth-quarter growth data, due on Friday, which is expected to set the stage for the Bank of Canada’s interest rate decision next week.
 The central bank is not expected to move its 4.25 percent overnight rate, but analysts will review its accompanying statement for any hints as to how the bank views recent economic signals.
 ”Ultimately, the fundamentals of the Canadian economy are stable to good, and that will ultimately reflect itself in a rise in the Canadian dollar over time,” said Spitz.
 ”But, in the short term, the volatility and the noise that exists in the global capital markets will undermine currencies like Canada.”
 BONDS END MIXED
 Canadian bond prices finished mixed, while the short end took advantage of the weaker than expected domestic data and a further slide in stock prices.
 Another piece of bond-friendly data was a separate report by Statistics Canada that showed factory prices fell 0.1 percent in January from December, while raw material prices declined 3.1 percent on the month.
 The two-year bond rose 3 Canadian cents to C$100.47 to yield 3.967 percent, while the 10-year bond was up 4 Canadian cents at C$99.80 to yield 4.026 percent.
 The yield spread between the two-year and 10-year bond moved to 5.6 basis points from 4.5 at the previous close.
 The 30-year bond ended down 5 Canadian cents at C$126.45 to yield 4.096 percent. In the United States, the 30-year treasury yielded 4.679 percent.
 The three-month when-issued T-bill yielded 4.20 percent, up from 4.19 percent at the previous close.