BMO

The Canadian dollar’s strength is acting as a headwind for the country’s economic recovery, but its rally isn’t happening in isolation, as broad U.S. dollar weakness has been a trend since last spring

The Canadian stock market has long been a laggard globally, but it reached record highs last week and has outperformed the S&P 500 by 3 percent in the second quarter.

The time is ripe for the emergence of a residential mortgage-backed securities (RMBS) market in Canada.

The Bank of Montreal has slashed its five-year fixed mortgage rate to 2.99 percent, a level that had previously raised concerns that it may lead to an overheated housing market.

Credit rating agency Standard and Poor’s lowered its outlook on Canada’s six largest banks on Aug. 8 a week after the federal government began forging ahead with its plan to protect taxpayers from having to bail out failing banks.

The Bank of Canada believes that the recent heating up of the housing market is a temporary phenomenon, according to the BMO.

TSX earnings are expected to rise 13.8 percent from 2013 to 2014, aided by an improving economy globally.

BMO is among other Canadian banks that are looking to trim expenses to help weather a period of sluggish consumer lending.

Affordability is expected to be determined by home prices in individual markets and by income growth in the near future.