In this episode, we dive deep into the various aspects of the Canadian economy, providing insights and analysis on recent developments. We discuss the unexpected rise in inflation in April, speculate on the Bank of Canada's next move, explore RBC's prediction of a housing market turnaround in spring 2023, analyze the Q1 population growth data, and examine the national housing market trends. We also touch on bond yields, business insolvencies, wage growth, and new home trends. Throughout the episode, we provide valuable insights and discuss the potential implications for individuals navigating the rapidly changing market.

Inflation surprised us all as it unexpectedly rose, increasing by 0.1% to 4.4% in April. This marks the first increase since June 2022 and is mainly driven by higher shelter costs, including rents and mortgage interest costs. Dan suggests that the Bank of Canada is chasing its own tail in trying to beat inflation, as the interest cost within the CPI basket has increased by 30% year over year. The previous statements made by the Bank of Canada's Governor about inflation getting under control, now seem questionable again. The expectations of a rate hike in the next six months and the potential for hitting a 3% inflation rate in the coming months are proving less and less likely.

We also take our focus to bond yields, which have risen to 3.3% from 2.87% in just two weeks. This increase is expected to push fixed rates up from the mid-4s to the high-4s, while still remaining lower than today's variable rates. The inverted yield curve,
 with a difference of 100 basis points, is a classic recession indicator that suggests the possibility of a recession, even if it takes until 2024.

 We also explore the topic of wage growth and we question whether it is necessarily a bad thing for Canadians considering the current cost of living. We reflect on the challenges faced by central bankers in aligning wage growth with the cost of living in a
 globalized economy. With larger global forces, such as fuel consumption, energy prices, global transport costs, and integrated supply chains are all driving inflation and affecting the average consumer through higher interest rates. We raise important questions about whether the right problem is being addressed and explore the future drivers of inflation, considering recent shifts towards protectionist perspectives and disruptions to the globalized economy.

National housing market trends have changed course starting with an 11% jump in sales, the largest month-over-month gain since COVID lockdowns. We note that new listings are at 20-year lows for the fifth consecutive month, resulting in a sales-to-new-listings ratio of 70%, the highest since 2021 and higher than 2016. The shift from a buyer's market to a seller's market and the significant decline in inventory, which has dropped by 6% in just one month continue to compounded pressures in the market. We also explore regional variations, with Ontario experiencing a 10% drop in active listings over four months. This episode is packed with insights that we surely have you scratching your head - especially the net immigration growth projection of nearly 2 million new people coming to Canada! Tune in and catch the full story!

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Dan Wurtele, PREC, REIA

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Ryan Dash PREC

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