{"id":11198,"date":"2023-08-21T06:34:53","date_gmt":"2023-08-21T13:34:53","guid":{"rendered":"https:\/\/www.stevesaretsky.com\/?p=11198"},"modified":"2023-08-21T06:35:04","modified_gmt":"2023-08-21T13:35:04","slug":"affordability-hell","status":"publish","type":"post","link":"https:\/\/www.stevesaretsky.com\/2023\/08\/news\/affordability-hell\/","title":{"rendered":"Affordability Hell"},"content":{"rendered":"\n
Happy Monday Morning!<\/p>\n\n\n\n
Headline CPI inflation surprised to the upside this past week, pushing back up to 3.3% and well above market expectations of 3%. However, those who have been following along here will know the importance of base effects. When headline inflation fell to 2.8% last month we were quick to highlight some research from our good friend Ben Rabidoux<\/a>, in which he noted, \u201cIf CPI averages 0.2% (or 2.4% annualized.. more or less in-line with the Bank of Canada\u2019s target), CPI will be pushing back towards 4% by year end.\u201d<\/p>\n\n\n\n Except we didn\u2019t get 0.2% we got an absoloute whopper at 0.6%. The bond market immediately launched yields higher, pushing the all important 5 year Canada bond to it\u2019s highest levels since the summer of 2007. Markets are now fully pricing in one more rate hike from the Bank of Canada before year end, with about a 30% chance of that happening on September 06.<\/p>\n\n\n\n In other words, there\u2019s no relief in sight for Canadian households. The longer interest rates stay elevated, the more pain cometh. Remember the mortage renewal wall hits hard in 2024 and 2025.<\/p>\n\n\n\n