B4 - Sunday, Augast 28, 1983 - North Shore News Have we reached, or are we coming to a turning point in interest rates? Long Term. In both Canada and the United States, in- terest rates long term have passed a peak recently. Thursday, August 4, the government of Canada 11.75% issue of February 1, 2003 yielded 12.35%: on Thursday, August 18, the yield had dropped to 12.21%, a fall of 14 basis points. Similarly, on Friday, August 5, the long 12% Treasury issue of August 15, 2013 yielded 12.11%: on Fri- day, August 19 it yielded 11.61%, a fall of 50 basis points. (The improvement at the long end has been greater in the United States than in Canada.) Short Term. The position is less clear at the short end than at the long end. In Canada, TreasurH bills at both the federal and provin- cial government levels have dropped in yield by something of the order of 10 basis points in the last week and the prospects are for a further fall, bringing bank rate back to a level of the order of 9.50%, which is where it was when the prime rate was dropped on the eve of the budget from 11.50% to 11% On the other hand, mortgage rates have been creeping up, so that the go- ing level for a 5-year mor- tgage is 14% and GIC rates have been going up also, so that 5-year GICs are now yielding 12.50% as opposed to 12%. Admittedly, the pro- spects of an increase im prime in Canada, when general loans are now $11,114 millon less than they were a year ago, are slim indeed, unless prime in the United states should go up again from 11% to 11.50% before the Congress reassembles after Labor Day. Background. Part of the background to all this, especially long term is that two economic numbers have, as it were gone wrong. In the United States, retail sales for July were down by 0.1%, even though there was a 10% cut in personal in- come taxes as of the beginn- ing of July and even though consumer credit in June rose by the substantial amount of $4.41 billion. These two numbers have given rise to ON THE WATERFRONT SEASPAN INTERNA- TIONAL Ltd., has started construction of the most powerful tractor tug = in Canada. The new shipdock- ing tug will be built at Van- couver Shipyards Co. Ltd. for completion in early 1984. The tug will be stationed at the coal superport§ at Roberts Bank in Delta, British Columbia. Delivery of the shipdock- ing tug will coincide with completion of a major ex- pansion et Westshore Ter- minals wm ~— includes con- struction of a second ship berth capable of receiving ships up to 25C,000 deadweight tons. This 4,000 horsepower tractor tug, designed by local naval architects Cleaver and Walkingshaw Lid. will have an overall Jength of 31.7 metres and a beam of 10.7 metres. Propul- sion will be provided by two Niigata main engines which will drive two Niigata Z Pellers with Kort Nozzles. These drive units are revolvable through 360° and capable of cxerting cqual thrust in any direction. This new special purpose tug will provide the basic ship horsepower for all SCOUTS CANADA INFORMATION HOT LINE 879-5721 assists at Roberts Bank. By constructing this tractor tug Seaspan is demonstarting its commitment to continue ser- ving the increasing number and sizes of ships arriving at Westshore Terminals and at ‘future terminals to be built at Roberts Bank. the belief that the United States economy is slowing down faster than practically anybody expected. Although the economic outlook can be argued back and forth the outlook for money supply in the United States has taken a distinct turn for the better. This shift in the direction of economic numbers, together with the improve- ment in the money supply outlook are the two positive aspects as regards interest rates, at least at the long term, in the United States and therefore in Canada. There is, however, a major negative aspect, which is the familiar problem of the size of the budgetary deficit not only in the United States but in Canada also. The outlook in the United States is that business capita] outlays will do better; that real disposable income should increase; that automobile sales should rise further even if housing starts do not; and the huge defence program will not be ap- precigbly reduced. If there is anything in all this, any fur- ther improvement in_ the economy in the United States should be reflected in Big tug for Seaspan Seaspan International Lid. is a division of Genstar Cor- poraton which has annual sales in excess of $1.5 billion. Genstar is also a ma- jor manufacturer of building materials, a real estate developer and provides a variety of financial services. Anal zing the world of interest ra due course in Canada, not least as regards exports. Market implications. We are therefore inclined to hold to the view we have had for several months now that there is not likely to be a dramatic change in the in- terest rate level during 1983. As we get into 1984, there could be some further fall in interest rates, for reasons of supply and demand and for general political reasons. But if the economic recovery is to-continue, a time could well come when the increas- ing credit demands of the private sector clash with the continuing credit demands of governments. But if the North American economy is to continue fairly strongly, the demand for credit short term is likely to increase: if this is so, then interest rates short term are not likely to drop very much during the rest of 1983. 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