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Written By: Benjamin Pipicelli, Dorje Gyaltsen, & Gordon Huynh
Economics Newsletter – June 28, 2024
Canada’s Economy at a Glance
Author’s Commentary
Canadian investors acquired a record $37.2 billion in foreign bonds in the first quarter of 2024, surpassing the previous year’s investments. Additionally, there was a $14.1 billion increase in foreign stock investments, predominantly in U.S. companies. This focus was largely on large-cap technology shares, spurred by the ongoing AI boom, and investment fund shares tracking broad U.S. equity market indices. Merger and acquisition activities also reached their highest level since the first quarter of 2023, spanning various regions and industries. This substantial increase in cross-border investments highlights a strategic shift towards high-growth sectors and broad market exposure, reflecting Canadian investors’ confidence in global markets.
News and Noteworthy
Bank of Canada will hold off on rate cuts till September
The Canadian economy will continue recovering in the second half of the year as the Bank of Canada resumes cutting interest rates in September, Deloitte Canada said in its summer economic outlook released on Wednesday. However, it also warned that more urgency is needed to address weak productivity. Read more.
Rising rents making Canada’s cities less affordable but still attractive to international workers
Canada’s major cities mostly became less affordable in the past year, but they remain highly attractive to international workers due to their high quality of life, according to an annual cost-of-living report. Read more.
Canada’s inflation surprises higher in May, casting doubt on a July rate cut
Canada’s annual inflation rate reaccelerated unexpectedly to 2.9 percent in May while measures of core inflation also increased, according to Statistics Canada, reducing the odds of a Bank of Canada rate cut in July. The increase came as a surprise to analysts, who had expected inflation to cool to 2.6 percent from 2.7 percent in April. Read more.
Wildfires raising Canadian home insurance costs
Wildfires are raising the price of home insurance in Canada, say industry experts, warning that coverage is becoming less affordable in the face of more extreme weather linked to climate change. Last summer’s wildfires in British Columbia’s Okanagan and Shuswap regions caused over $720 million in insured losses, a record for events in the province, according to industry data. Read more.
Global investors pounce on Canadian bonds
Foreign investors jumped into Canadian bonds and money market instruments in April at a rate not seen in two years, with bond investments the second highest on record, according to the latest data from Statistics Canada. At the same time, Canadian investors’ enthusiasm for foreign securities was muted in the same month, with a net investment of $2.5 million as purchases of foreign debt securities and U.S. government bonds in particular were effectively cancelled out by sales of foreign equities. Read more.
Economics Society News, Events, and Articles
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