The Loonie Hour Sovereign Debt Markets Facing Turmoil in 2025?
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Dec 27, 2024 Rising bond yields clash with central banks cutting rates, creating a precarious economic environment. Canadian housing faces increasing defaults, leading to tough times for new constructions. Meanwhile, China's bond market signals trouble, hinting at the need for massive stimulus. The discussion dives deep into the disconnect between wage growth and skyrocketing real estate prices. Global economic trends, especially in AI and shifts in commodities, raise eyebrows, while the implications of inflation in Canada loom large.
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Canadian Housing and Currency Devaluation
- Canadian housing affordability has declined due to policy decisions, not just market forces.
- The Canadian dollar's devaluation creates a nominal illusion of stable house prices, masking a decline in real value.
Shifting Homeownership Landscape
- It used to be possible to buy a house on one income, even with children.
- Now, even two high earners struggle, highlighting a disconnect between wages and manipulated CPI.
Wealth-Based Housing Market
- The current housing market functions as a wealth-based system, not an income-based one.
- Down payments rely on existing wealth creation, often fueled by factors like pandemic-era money printing.