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By HaleStewart April 15, 2018 8:17 am
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International Economic Week in Review: International Potpouri

             This was a modest week of international news. 

            Canadian news was light this week, with building permits being the main release.  Permits dropped 2.6%, but remain in the 775-850 range, where they’ve been for the last 10 months:


The Bank of Canada recently imposed increased lending restrictions, where were summarized in the latest Senior Loan Officer Survey:

Overall, household lending conditions tightened in the first quarter of 2018, driven by mortgage-related lending (Chart 1).

The tightening in mortgage lending was driven by recent changes to underwriting standards (Guideline B-20), which mainly affected non-price conditions4 for low-ratio mortgages and home equity lines of credit (HELOCs) (Chart 2). Price conditions for mortgages also tightened, as the spreads charged to customers increased in tandem with mortgage rates.

Overall, demand for low-ratio mortgages and HELOCs increased slightly. However, some institutions reported a decrease in demand due to regulatory changes, while others reported an increase, citing some pull-forward from applications received before the implementation of the B-20 changes, as well as expectations of higher interest rates. In the next quarter, respondents expect a decrease in the demand for low-ratio mortgages and HELOCs. Demand for high-ratio mortgages has continued to decline since regulatory changes were introduced in the autumn of 2016.

The Canadian housing market had growth a bit heated, with prices rising:


The Bank of Canada is attempting to slow the price escalation down.

            Japanese news was positive.  Consumer confidence remained at 44.3.  However, this statistic – which strongly influences consumer spending – remains near a high level for this cycle:

Machine tools orders – which are a very volatile series – were off 2.3%.  But a closer look at the data shows this was due to a decline in overseas orders:


Orders from the private sector and the government were up strongly.  The 7.8% decline in overseas orders led to the decline.  However, the overall trend of the non-volatile series is strongly positive:

            The only news from the UK was the 2.2% Y/Y rise in industrial production and 2.5% increase in manufacturing output.  Despite the potential loss of business from Brexit, both of these statistical series are in a solid uptrend:







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