Time for your cheat sheet on this week’s top stories.
Canadian Real Estate
Canada Taps Leveraged Hedge Funds For Over 40% of New Debt, Warns BoC
Canada’s central bank has growing concerns about how the country is financing its debt. In its annual risk report, the Bank of Canada warns that hedge funds are buying 40% of new Government of Canada (GoC) bonds. They explain this helps with liquidity now, but those funds are leaning heavily on leverage—often using GoC bonds as collateral. The concentration and leverage present a serious risk for the whole economy. Rather than help with liquidity during a crisis, these firms are likely to draw down and reduce it. Ultimately, that raises the cost of financing when policymakers will actually need it.
Canada’s Deficit Plan Has Less Than 1% Chance of Success: PBO
Canada is set to double its deficit to $72 billion, pushing the deficit-to-GDP ratio from 1.2% to 2.2%. However, policymakers say it’s a temporary bump that will begin to taper starting next year. The country’s policy watchdog says it makes sense on paper, according to its latest stress test. However, the Parliamentary Budget Officer pegs the probability at less than 1%. Is that what people mean when they say it’s a budget for the 1%?
Canadian Banks Hold Fewest Mortgages Since 2020, Arrears Near Decade High
Canadian banks reported 13,000 mortgages in arrears in March, up 24.7% from last year and the most in 12 years. The arrears rate has also climbed to 0.28%, and now sits at its highest level in 9 years. However, the biggest story in the latest data is the shrinking number of mortgages at banks. A shrinking market share amplifies the pain of every mortgage delinquency.
Canada’s Job Market Posts Historic Surge, But There’s A Catch
Employment climbed by 88,000 jobs in May, the third-biggest climb ex-pandemic. It helped push the unemployment rate to 6.6%, its lowest level in 4 months. A technical recession, with surging delinquencies and insolvencies, with a job boom? If you’re skeptical—good call, the hiring is driven by temporary jobs created by taxpayers. In fact, one of the biggest contributors to that trend is likely StatCan, hiring help for Census 2026. Temporary jobs are better than no jobs, but it’s important to understand the difference. This isn’t a job boom, it’s an economy on life support.
Toronto Real Estate
Toronto Home Sales Jump, But Still 3rd Worst May In 25 Years
Toronto real estate sales improved last month, inventory fell, and prices climbed. The price of a typical home climbed 0.25% to $946,500 in May, marking a fourth consecutive month of growth. Home sales were up 6.3% from last year, while active listings fell 13.3%. All these data points reveal solid improvements from last year, but the market is far from normal. Last month was still the third weakest May in 25 years for sales, and one of the highest inventory levels on record. A solid reminder that a better market isn’t the same as a good market—even if the industry sells it that way.
