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BOC start QE?
November 24, 2018
6:32 pm
Brimleychen
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https://www.bankofcanada.ca/2018/11/expansion-assets-bank-canada-will-acquire-balance-sheet/
...
As part of these changes the Bank plans to allocate a small portion of its balance sheet for acquiring federal government guaranteed securities by purchasing Canada Mortgage Bonds.
...

Quietly QE in Canadian Verson

November 25, 2018
7:53 am
Kidd
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Okay.... as you may know, "my glass is always completely empty" so i saw nothing positive in the article link.

I read the article and i saw the words, "lipstick on a pig." The bank of canada is going to buy mortgage debt, in the form of mortgage bonds? They like to buy securities to offset their liabilities, and these securities are going to be... deadbeat MORTGAGE DEBT? These bonds will be bought in a non competitive market place, meaning... no one of any intelligence would ever touch them.

So... we are buying bad paper to cover our liabilities?

Bill, Norman, Loonie.... what am i missing here?

Peter... you need to turn the automatic deletion of all my posts, off. sf-surprised

November 25, 2018
10:09 am
Norman1
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It doesn't matter if the mortgages behind the Canada Mortgage Bonds are deadbeat. The Canada Mortgage Bonds are guaranteed by CMHC. This is from CMHC’s Guarantee of Canada Mortgage Bonds:

Canada Mortgage Bonds issued by Canada Housing TrustTM No. 1 (the “Issuer”) are fully guaranteed as to timely payment of principal and interest by Canada Mortgage and Housing Corporation (“CMHC” or the “Guarantor”) as agent of Her Majesty in right of Canada (the “CMHC Guarantee”).

The CMHC guarantee is actually stronger than the CDIC backing of deposits. CMHC guarantees not only the principal and interest but also the timely payment of them. CDIC does not guarantee timely payment.

November 25, 2018
10:49 am
Loonie
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Norman1 said
CMHC guarantees not only the principal and interest but also the timely payment of them. CDIC does not guarantee timely payment.  

Excellent point, Norman.
My dad waited many months back in the '80s to get his money out of CDIC.

I'm sure someone will correct me if I'm wrong, but I believe these bonds are fully backed by the govt, and thus not subject to CDIC insurance limits.

November 25, 2018
11:40 am
Top It Up
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SWEET ... Finance Minister Morneau giving instructions to the Bank of Canada ... the Liberals truly are a slippery slope government.

November 25, 2018
12:20 pm
Norman1
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Loonie said

I'm sure someone will correct me if I'm wrong, but I believe these bonds are fully backed by the govt, and thus not subject to CDIC insurance limits.  

Canada Mortgage Bonds are not deposits. They are marketable bonds issued by Canada Housing Trust.

Canada Mortgage Bonds can be traded through investment dealers like other bonds. For example, Canada Mortgage Bond Series 86 (2.55% coupon, maturing 2023-Dec-15) last traded at 99.62% of face value, giving a yield-to-maturity of 2.63%.

November 25, 2018
12:29 pm
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CMHC allocates close to $20 million for more affordable homes in Winnipeg

Canada Mortgage and Housing Corporation (CMHC) recently announced the construction and funding of 95 new rental housing units in Winnipeg, in an effort to provide more affordable homes to middle-class families.

"Through the National Housing Strategy, more middle-class Canadians - and those working hard to join it - will find safe, accessible and affordable homes in communities where their families can thrive and children learn and grow. This investment is wonderful news for the Winnipeg middle-income families that will move into these new affordable rental housing units,” said The Honourable Jean-Yves Duclos, Minister of Children, Families and Social Development.

https://www.whichmortgage.ca/article/cmhc-allocates-close-to-20-million-for-more-affordable-homes-in-winnipeg-251007.aspx

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Expect plenty more of these redistribution of wealth project announcements leading up to next year's federal election - this is just Morneau getting the early jump on the BoC instructions to aide and abet the plan.

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