Article courtesy of Real Estate Board of Greater Vancouver, Commercial Market News, February 2012

The BCREA Commercial Leading Indicator (CLI) rose for the second consecutive quarter, advancing 1.1 points to an index level of 111. On a fourth-quarter over fourth-quarter basis, the CLI moved 1.6 per cent higher in 2011. While this is a marked slowing from the 5.2 percent surge in 2010, the index picked up considerable momentum in the third and fourth quarter of the year, more than making up for a weak first half of 2011.


The trend in the CLI turned up slightly as early softness in economic activity was smoothed out by a stronger second half of the year. This change in trend indicates a positive economic environment for the BC commercial real estate sector in 2012. “Improving economic data provided a strong tailwind for the CLI in the second half of 2011,” said Brendon Ogmundson, BCREA Economist. “However, growing anxiety surrounding the global economy could constrain the economic environment for commercial real estate this year.”The full BCREA Commercial Leading Indicator index is available at: www.bcrea.bc.ca/docs/economics-forecasts-and-presentations/clireport.pdf

Francine Tracey

604-961-6550

 
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Commercial Bond Yields

 

Canada Mortgage Bond

Canada Housing 06/15/17*: 1.82%

Canada Housing 03/15/22: 2.55%

* denotes interpolated rate

 

Select Government of Canada Bonds

CAN 4.00 06/01/17: 1.50%

CAN 3.25 06/01/22: 2.16%

GOC Bonds are for reference purposes only

 

First National Floating

Insured Cost of Funds

1.14%

 

Bank Prime Rate

3.00%

 

Posted Rate

1 Year: 3.50%

2 Year: 3.55%

3 Year: 3.95%

4 Year: 4.64%

5 Year: 5.14%

 

Market Commentary 

Yields are up and so is Canada’s inflation rate.  The CPI was pushed higher in January by food and energy prices.  Last month’s consumer prices climbed 2.5% Y/Y, a slight increase from the 2.3% Y/Y posted in December.  Core inflation – excluding food and energy – came in at 1.6% Y/Y in January, again, a slight increase from 1.3% Y/Y in December.  Increased car prices are cited for the increase.

 

Inflation in the U.S. increased a seasonally adjusted 0.2% in January, for a 12 month, unadjusted rate of 2.9%.   Core inflation for 12 months stands at 2.3%.

 

Initial jobless claims in the U.S. dropped to a new cyclical low of 348K in the second week of February, nearly 20K below expectations. 

 

And Canada’s international securities transactions report indicates an on-going appetite for Canadian assets.  In December foreigners acquired $4.7B worth of securities, including $2.1B in bonds.  Foreigners purchased a total of $95.6B worth of Canadian securities in 2011, down from $117.4B in 2010.

 

Next week, look forward to Canadian Retail and wholesale trade numbers, U.S. existing home sales , Canadian Q4 corporate profits and American consumer sentiment.

 

Source - First National Commercial Financing

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