MARCH 2023 - WHAT'S HAPPENING IN A MARKET?
Monday Apr 10th, 2023
The economy and financial markets continue to deliver surprises. Mid-March bank collapses in the U.S. and concerning remarks from a major Swiss bank had economists pointing to the rapid interest rate increases by many Central Banks around the world as part of the issue.
Does that mean an end to rate increases?
On the bright side, inflation in both Canada and the U.S. seems to be easing which is seen as a positive signal that the moves by Central Banks are working. The Bank of Canada paused its rate hike on March 8th and by the end of the month markets were now forecasting a 40% chance of a BoC rate cut on April 12th, and likely another rate cut by the summer. Even if the BoC doesn’t cut the rate in April, forecasters predict that it likely won’t head higher.
What about housing markets?
The number of home sales nationally was up 2.3% month-over-month in February and the month-over-month price declines are getting smaller. February 2023 sales activity figures were comparable to what was seen in February 2018 and February 2019, leading forecasters to suggest that housing markets are returning to a more normal balance. Taking a wider view, pandemic-era home prices and market activity between February 2020 to February 2022 were a huge anomaly. In February 2020, the Average Canadian Home Price was $540,000. In February 2023, it’s up to $662,437. That’s up more than 22%. While media headlines seem to focus on the past year’s home price shifts, it’s the big picture that matters.
While geopolitical conflicts, supply chains issues, and financial market uncertainties continue to cloud economic outlooks, the wider view often presents a balanced perspective.