This week's mortgage market update contains:

• American growth forecast reduced
• Business in five of seven sectors falls
• Cracks widen in U.S. housing market

This week's highlights:

• US Consumer Price Inflation Moderates in October
• Canadian Inflation Stays Low in October, though Core Rate Edges Higher

This week's Quote:

Help others get ahead. You will always stand taller with someone else on your shoulders. - Bob Moawad

Weekly Articles of Interest

American growth forecast reduced
JOANNE MORRISON
Nov 22, 2006 07:09 | Toronto Star
for the overall economy. The White House forecast that real gross ..... economy is moderating to more sustainable growth levels, firmer labour
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Business in five of seven sectors falls
Nov 21, 2006 07:50 | Toronto Star
drop this year and confirming expectations that the economy will slow ..... send the same signal, and that is that the economy did soften ..... in the economy." "We do expect the economy's growth rate to be a little
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Cracks widen in U.S. housing market
LAUREN VILLAGRAN
Nov 20, 2006 18:07 | thestar.com
and weaker vendor performance. “The economy is growing more slowly ..... , referring to when the economy turns from growth to a recession. The housing ..... suggests “the economy is unlikely either to reheat or to get
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This Week's Highlights

• US Consumer Price Inflation Moderates in October
• Canadian Inflation Stays Low in October, though Core Rate Edges Higher

The US consumer price index fell a greater-than-expected 0.5% in October, taking the year-over-year rate down to 1.3% from 2.1% in September. Gasoline prices continued their recent slide, down 11.1% in the month and 18.3% from a year ago. The core, or ex-food and energy, index rose a weaker-than-expected 0.1% in the month, allowing the year-over-year rate to ease to 2.7% from 2.9% in September. The annual core rate has been rising steadily from a recent trough of 2.1% in March 2006. The partial reversal of this trend in October has eased concerns about a deterioration in the inflation outlook, though a further retracement is needed to more fully eliminate this risk.

The Canadian consumer price index fell 0.2% in October from September. This kept the year-over-year rate low at 0.9% though it is up from 0.7% in September. The monthly decline largely reflected a continued slide in energy prices, with gasoline down 4.0% in the month and natural gas down 11.4%. The core index, which excludes the eight most volatile items and the effect of changes in indirect taxes, rose an expected 0.1% in October. This raised the year-over-year rate to 2.3% from a revised 2.2% in September and from 1.7% in October 2005. The monthly increase in the core index was due to higher costs for housing, with homeowners’ replacement cost up 0.5% and property taxes up 3.0% (the annual increase in this component is reflected once a year in October). These gains were partly offset by declines in clothing and footwear (-0.8%) and recreation, education and reading (-0.6%).

About one-third of the increase in annual core inflation in the past year is due to an acceleration in homeowners’ replacement cost. This, in turn, is due to soaring new home prices in Alberta, up 52.0% in September from a year ago. But the prices of many other products have fallen from a year ago, including clothing and footwear (-1.6%) and household furnishings (-1.5%).Although the upward trend in core inflation is concentrated in housing, and thus likely to retrace as the market cools, the fact that the current rate remains above the Bank of Canada’s 2.0% midpoint target will continue to weigh against an interest rate cut. Thus, despite the ongoing softness in the economy, it is still expect that the central bank will hold rates steady for the foreseeable future.