By MICHAEL BABAD
Monday, March 12, 2018
If you own a home and/or are deep in debt, read 'em and weep when this week's reports on housing and credit are released.
But if you're a federal or provincial policy maker, you're just a couple of cards away from a good hand.
Both reports come on Thursday - one from the Canadian Real Estate Association, the other from Statistics Canada.
Both will be something to watch for governments and regulators, who have acted forcefully with measures to tame bubbly housing markets and ensure mortgage lending isn't out of hand.
Then there are homeowners fretting over the declining values of their properties.
First up is Statistics Canada's widely watched report on debt and wealth in the fourth quarter.
The Bank of Canada noted just last week that consumers have recently shown restraint in their borrowing habits.
But Thursday's reading is for the period in the run-up to the new mortgage qualification rules from the Office of the Superintendent of Financial Institutions, the commercial bank regulator, so it obviously won't reflect the current regime.
The key measure of household debt to disposable income stood at just more than 171 per cent in the third quarter, which means we owe $1.71 for each dollar we've got to spend.
Thursday's measure could well mark a fresh record high, Bank of Montreal senior economist Robert Kavcic said.
"While the Bank of Canada highlighted slowing credit growth in its latest policy statement, that became more pronounced early in Q1 as housing activity slowed," Mr. Kavcic said in a report on what to expect from Statistics Canada.
"Still, the historically high debt levels do suggest the economy is more sensitive to interest rates, one reason for caution within the walls of the Bank of Canada," he added.
That brings us to 30 minutes after the Statistics Canada report, when CREA releases its look at February home sales and prices.
We've already seen results from several local real estate boards, and Mr. Kavcic expects the national report to show a February drop in sales of 12 per cent from a year earlier, and a fall in average prices of 5 per cent.
The MLS home price index, which is considered a better measure, should show a slower rise of 6 per cent.
Of course, the national numbers get skewed by Vancouver and Toronto, the latter having seen a sales decline of 35 per cent in February from a year earlier.
"Other major cities didn't see as dramatic declines, but the overall picture is subdued, with Vancouver sales down 9 per cent year over year, and Calgary down 18 per cent year over year," Mr. Kavcic said, noting Montreal "bucked the trend" with a 5-percent gain.
"One of the key price themes is ongoing double-digit gains in the Toronto and Vancouver condo markets, even while detached home prices are falling."
MONDAY: NO LIMIT?
We'll see if stocks can pick up where they left off after a tumultuous week that saw U.S. President Donald Trump unveiling tariffs on steel and aluminum, and the Bank of Canada sounding a cautious tone that nonetheless suggests higher interest rates this year.
The S&P 500 ended the week with a 3.5-per-cent gain.
"For equity investors, the TSX faces the reality of softer growth, less-than-friendly relative policy dynamics (be it on the fiscal or trade fronts), and an increasingly challenged domestic oil market," BMO's Mr. Kavcic said.
TUESDAY: ROYAL (AND) FLUSH
Her Majesty's Treasury releases a spring statement that will be scoured for details of the Brexit divorce from the European Union.
This is like a mini-budget that basically sees Chancellor of the Exchequer Philip Hammond, the equivalent of our finance minister, respond to fresh forecasts from the Office for Budget Responsibility.
"The Chancellor will be pleased to see that he is on course to reduce government borrowing by at least £10-billion more than expected due to higher-thanexpected tax receipts," CMC Markets chief analyst Michael Hewson said.
"He is likely to find himself under pressure to loosen the purse strings, however, that may have to wait until October, when we have a better idea of the type of deal that is on the table from the EU. We are expected to see some detail on the EU divorce settlement payments in the wake of the recent deal signed by Prime Minister [Theresa] May in December."
Also on tap is the U.S. report on consumer prices, which economists expect to show a rise in annual inflation to 2.2 per cent or 2.3 per cent. On a monthly basis, expect 0.2 per cent.
Investors will watch for what it suggests about the next moves from the Federal Open Market Committee, the U.S. Federal Reserve's policy-setting group, which meets again in a couple of weeks.
"The risks that inflation will accelerate faster than the Fed currently expects are mounting," Toronto-Dominion Bank senior economist Leslie Preston said.
WEDNESDAY: IMPLIED ODDS
Key economic reports from China include measures of industrial production, retail sales and fixedasset investment.
"We think that industrial production growth slowed in the first two months of this year, partly due to continued disruptions from the anti-pollution campaign," Chang Liu of Capital Economics said. "Meanwhile, slower infrastructure spending probably dragged down fixed investment growth. We expect that retail sales growth edged down a touch too, given the recent softening in consumer confidence."
Today also brings the latest look at U.S. retail sales, expected to show a rise of 0.3 per cent for February.
THURSDAY: FULL HOUSE
Besides the Statistics Canada and CREA reports on debt and housing, there are a handful of quarterly results, including those from Adobe Systems Inc. and AutoCanada Inc.
FRIDAY: GO FISH (OR CUT WOOD)
Observers expect Statistics Canada's monthly report on manufacturing sales to show a decline of up to 1 per cent in January.
"Disruptions to auto production will once again play a part due to shutdowns at an Oshawa plant, which should drive a sharp decline in transportation equipment sales," TD said in a lookahead.
"Meanwhile, the broad decline in exports bodes poorly for factory output as a whole," the bank added. "Energy should provide an offsetting source of strength on higher prices for refined products, though we see headwinds to forestry products after the U.S. resumed collecting duties on softwood lumber."
A condo tower stands in Toronto in May, 2017. Toronto and Vancouver are seeing increases in condo prices despite a drop in detached-house prices, according to a BMO economist.
MARK BLINCH/THE GLOBE AND MAIL