Reduce in American mortgage will not hurt Canada

In Toronto, CIBC World Markets stated that the rising global energy and base metal prices will cancel out economic spillover into the Canadian markets from the huge problems in US subprime mortgage market.

As stated by CIBC World Markets’ Canadian Portfolio Strategy Outlook reports that this year the Toronto Stock Exchange will outperform the S&P 500.

CIBC World Markets chief economist Jeff Rubin stated in a release that while they expect to see more distress in both the U.S. housing market and the subprime mortgage market, there is still a bit evidence of wide contagion effects in financial markets.

He even added that “corporate spreads stay firm by any historic benchmark while option volatility on the S&P 500 is only a fraction of that seen in recent year’s panic attack over the U.S. Federal Reserve’s tightening."

Subprime loans are set off to those people who have unsteady credit histories, which offer higher profits at the same time higher risk to lending companies.
A report said that due to its grounded in resources and energy, the TSX feels further impact from global growth than from Canadian or North American economic performance.

Rubin stated that as one with high uranium prices and firming natural gas prices, the come back of US$70 per barrel oil will propel the TSX energy sector to new highs.
In Canada, subprime mortgages make up below five per cent of new mortgages but above 20 percent in the US.

Expecting that U.S. Federal Reserve can cut interest rates to "hold any contagion effects" outside the housing industry and to make up for the impact on consumer spending, this was CIBC World Markets stated.

Eliza Maledevic

Florida Mortgage Broker 

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