CANADA: CMHC Says Restoring Home Affordability By 2030 No Longer Realistic
- Federal agency Canada Mortgage and Housing Corp. says its earlier discussion of restoring housing affordability by 2030 is no longer realistic, so it's starting to publish a rolling 10-year estimate of what's needed to meet that kind of goal.
- The benchmark of affordability has also shifted upwards since the pandemic, so the benchmark is no longer levels of affordability seen two decades ago but "to levels seen just before the pandemic"
- Difficult goal of doubling the pace of construction remains in place: "We now estimate that housing starts must nearly double to around 430,000 to 480,000 units per year until 2035 to meet projected demand."
- "The productivity of the Canadian economy suffers from unaffordable housing as the capacity to attract skilled workers is diminished and the young are deterred from staying in our largest cities partly because of the lack of attainable housing. And Canada’s enormous level of household debt creates a vulnerability in the event of a global economic crisis."
- Politicians have also pledged measures to make houses more affordable and have increased focus on supply over the last year.
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FOREX: Greenback Sold as FX Catches Up with Long-End Weakness
Phase of bond sales in both Europe and the US starting to be felt in dollar markets - despite initial resilience to the steepening bias for the US curve. EUR/USD is back toward the upper-end of the day's range, but resistance layered between 1.1278-88 stands ahead of any bullish breakout.
- GBP looks through headlines that the UK are freezing free trade deal negotiations with Israel, with GBP/USD now over 30 pips off lows. We noted earlier today that the pair struggles to maintain gains above the $1.34 handle - a level that will remain in focus headed into tomorrow's inflation print - a number we see as particularly consequential for UK monetary policy this year.
- GBP/AUD's RBA tripped gains see the cross hit new daily highs, with prices still some way off more major resistance into the 2.1030 late April high.
EUROZONE DATA: May Flash Consumer Confidence A Bit Stronger-than-expected
Eurozone flash May consumer confidence was a little stronger-than-expected at -15.2 (vs -16.0 cons, - 16.6 prior). The survey collection date was May 1 - May 19, so fully incorporated the latest easing of US tariff tensions (e.g. agreements with the UK and China).
- Country and sub-component level data is not available in the flash release, with more information filtering through in national-based surveys over the coming days.
- The correlation between consumer confidence and actual household consumption data is quite weak. However, weak sentiment has been cited by ECB officials as a downside risk to growth, and will likely be reflected in the ECB's June projections.
NETHERLANDS: Pension Reform Amendment Split Risks Coalition Instability
An amendment to the controversial Dutch pension reforms has failed following a close roll-call vote in the House of Representatives (for more on detail of the reform see 'SWAPS: Dutch Pension Reform Amendment Voted Down, EUR Curve Steepens', 1455BST). The amendment was backed by three parties from the coalition gov't: the NSC, the right-wing nationalist Party for Freedom (PVV), and the agrarian populist Farmer-Citizen Movement (BBB), as well as the Socialist Party, Party for the Animals, Forum for Democracy and DENK.
- It was opposed by the fourth party in the coalition, the pro-business centre-right People's Party for Freedom and Democracy (VVD), as well as the centre-left environmentalist GreenLeft-Labour (GL-PvdA), Democrats 66, the Christian Democratic Appeal (CDA), the Reformed Political Party, the Christian Union, Volt and Ja21
- These groups of parties each hold a combined 75 seats. However, with three pro-amendment lawmakers absent compared to two from the anti-amendment parties, the measure failed.
- The fight over the amendment risks deepening fractures in the uneasy coalition. The NSC's founder, Pieter Omtzigt, quit frontline politics in April, while the PVV has seen its support slump in recent months to the point where it is effectively evel with the VVD and GL-PvdA at the top of polls. The next election is not due until March 2028, but there is a declining likelihood that the current coalition will last the duration.
- Given the resurgence in support for the VVD, GL-PvdA, and the conservative CDA, any early election could return a lower chamber with a more cohesive, moderate majority at its centre.
