Daily Pulse


A surge in mortgage borrowing is pushing consumer debt loads higher in Canada despite falling credit card use, as households plow more money into their homes while spending less on everything else. New mortgage borrowing rose 41 per cent in the first quarter compared to the same period in 2020, when the pandemic began, according to a release Tuesday from consumer credit reporting firm Equifax Inc. The average limit on new mortgages – the amount for which borrowers were approved – jumped more than 20 per cent to $326,930. The increase in the number and size of mortgages Canadians are taking out drove the country’s outstanding consumer debts to nearly $2.1 trillion, despite a drop in credit card balances to their lowest point in six years, Equifax said. The pandemic has helped spur a record boom in Canada’s housing market as rock-bottom interest rates and new demand for bigger living spaces has fueled bidding wars for ground-level homes. With a number of provinces going in and out of lockdown throughout the past 15 months, Canadians have also had fewer opportunities to spend on everything from restaurants to clothes to entertainment. A higher savings rate, combined with emergency income support from the government, has played into the housing boom while also helping consumers pay down their credit card debts.

Prime Minister Justin Trudeau is preparing to ease Canada’s border restrictions for travellers who have been fully vaccinated against COVID-19, according to people familiar with the discussions. The government is crafting plans to loosen the current 14-day isolation period for border-crossers who’ve had two vaccine doses, said the people, speaking on condition they not be identified. Travellers entering Canada would still be tested for the virus and may be required to quarantine for a shorter period. The plan is expected be announced within days, though the timing could shift, according to the people. It isn’t clear when the changes would be implemented or whether Canada will open up its borders to non-U.S. travellers at the same time.


The Biden administration is set to announce a series of steps designed to strengthen critical U.S. supply chains on Tuesday, building up domestic manufacturing capabilities for key products and addressing existing vulnerabilities. In February, President Joe Biden ordered a 100-day interagency review of domestic supply chains. The outcome of this review and the resulting policy recommendations make up a new report totaling several hundred pages, due to be released on Tuesday. The report’s initial recommendations focus on four products critical to the U.S. economy: large capacity lithium batteries, rare earth minerals, semiconductors and active pharmaceutical ingredients.

The Federal Reserve is in the early stages of a campaign to ready markets for reducing its $120 billion in monthly asset purchases to stimulate the economy. Comments by Fed officials in the past several weeks suggest the issue of tapering looks likely to be discussed as soon as the Federal Open Markets Committee meeting next week, and the Fed may be on track to begin asset reductions later this year or early next year. At least five Fed officials have publicly commented on the likelihood of those discussions in recent weeks. While the discussion may take place, an announcement of a decision to actually taper would be several months later, perhaps in late summer or early fall. That announcement would then put the beginning of the asset reduction further out, perhaps by year-end or early next year. Since the Fed will taper its purchases, that is, reduce the amount it buys by some amount each month, that timeline would still see the Fed purchasing billions of dollars of assets well into 2022, though at an increasingly slower pace.


European stocks traded higher on Tuesday morning as investors look ahead to euro zone growth and employment data for the first quarter, and remain focused on concerns over rising inflation. The pan-European This link will open in a new tab. Stoxx 600 index was up 0.6% with most sectors in positive territory apart from Oil and Gas, Chemicals, Industrials, Basic Resources and Autos. Investors in Europe on Tuesday will be keeping an eye on data releases including revised GDP and employment figures for the first quarter. Other data releases in Europe Tuesday include Germany’s ZEW survey of economic sentiment for June, German industrial output for April and U.K. retail sales data for May.


Shares in Asia-Pacific were mostly lower on Tuesday, as investors reacted to the release of Japan’s revised first-quarter gross domestic product figures. Revised government data released Tuesday showed Japan’s economy shrank 3.9% in the first quarter, an improvement from the initial estimate of a 5.1% contraction. The revised gross domestic product compared against economists’ median forecast in a Reuters poll for a 4.8% contraction. “We expect the economy will experience another contraction in Q2 given the extended restrictions, which will weigh heavily especially on the services sector,” Makoto Tsuchiya, assistant economist at Oxford Economics, wrote in a Tuesday note. “However, we remain optimistic that the pace of recovery will pick up in H2 as domestic demand recovers, supported by increased vaccinations, while foreign demand should continue to support the manufacturing sector.”

The author

Michel Doucet

Michel Doucet

Vice-President and Portfolio Manager
After obtaining a Bachelor's degree from the Faculty of Social Sciences at the Université du Québec in Montréal and his Master’s degree, Michel Doucet began his career as a junior economist at the National Bank head office in Montreal. In 1992 he joined the institutional equities and fixed income group at Lévesque Beaubien Geoffrion as an economist and market analyst. Over the years, he has led various projects related to the North American and international economies as well as Canadian public finances. In 1996, the team of institutional economists to which he belongs was ranked first in Canada by Brendan Wood International. In August 1997, Mr. Doucet joined the personal services division of Lévesque Beaubien Geoffrion where he served as an economist, fixed income market analyst and vice president. In 2004, he joined the Desjardins Securities full service team as Vice President. He now occupies the roles of fixed income strategist, economist and portfolio manager. He manages the Securities Portfolio Advisory Group, advisor marketing and distribution of financial planning and insurance.