If I were to tell you the TSX (Canada) was up +7.22% for the month of November alone, you might be hard-pressed to believe me. How about the S&P500 up +8.92% or the Nasdaq coming in at +10.7%? Great news (and relief), all around.
I must admit I was holding my breath as the Canadian banks began reporting their 4th quarter results, at the end of November. I was pleasantly surprised that all of them fared relatively well and their respective stock prices have bounced up since the 1st of December. This has occurred despite the increased credit-loss provisions that most have been required to implement.
In my opinion, much of the market performance for the next number of months will be directly tied to forecasted interest rates and their likely decline later in 2024. With respect to this, and as expected, the Bank of Canada held its policy rate at 5%, this morning. With inflation trending lower, the BOC has likely reached its peak policy rate for this cycle.
The topic on everyone’s minds is upcoming mortgage renewals and how that will affect many households and therefore, the broader economy.
Our “in-house” mortgage specialist recently pointed out that fixed mortgage rates have come down 35bps in the past 30 days. It is expected with bond yields dropping, mortgage rates will likely follow. According to his stats, in 2024, 14% of RBC’s mortgage portfolio will come due, representing about $52 billion. As for the entire Canadian mortgage market, $1 trillion worth of mortgages are going to mature during 2024 to 2026. These are huge numbers, certainly by Canadian standards.
If you are interested, RBC’s latest Housing Market Update can be found here.
As we head into the most festive time of year, Amanda and I wish for each of you, a peaceful and relaxing holiday.
Libby
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