Canadian households hold more than $8 trillion in stocks, bonds and currency deposits, and these liquid assets have been growing at a more than 10% year-over-year clip since mid-2024, said Bank of Montreal (BMO).
According to BMO, conversations about household finances usually center around debt and it noted the debt-to-disposable income ratio did edge up in seasonally-adjusted terms in Q1, and the debt service ratio remains elevated.
However, the run-up in asset values has been a big offset, it said.
As a ratio, liquid financial assets now weigh in at roughly 260% of total financial liabilities, a record high going back to the 1990s, noted BMO. "Sturdy, albeit fading, disposable income growth and savings rates have helped, but the roaring bull market is clearly the driver," it added.
This positive wealth/liquidity effect is helping through a period of higher gasoline prices and upward mortgage rate resets, said BMO. But, an equity bull market can be easy-come/easy-go, and tends to be concentrated at the higher end of the income spectrum, it added.
"For now, though, add this to the factors keeping Canada's economy above water," BMO said.