HIGHLIGHTS OF THE WEEK

United States

• Central banks took center stage this week with a dovish European Central Bank hinting at further stimulus in December and the People’s Bank of China delivering it with rate cuts and lower reserve requirements.
• Bond and equity markets rallied on the dovish central bank news. The S&P 500 ended the week up close to 2% (as of writing) and erased all its losses since mid-year (see chart below).
• Next week, the Federal Reserve will return to the spotlight. The Fed is not expected to change policy, but the statement will be parsed for signs of caution on the economic and inflation outlook. We expect the Fed to also remain on hold at its meeting in December.

Canada

• The federal Liberal Party, led by Justin Trudeau, won 184 seats in the federal election on Monday – more than enough to form a majority government. Their election platform included a revamp of the tax system and higher infrastructure spending, with deficits anticipated over the next three years.
• The Bank of Canada left its key policy rate unchanged on Wednesday. In the accompanying Monetary Policy Report, the Bank acknowledged the economy performed better than anticipated recently, but downgraded its forecast for 2016 (-0.3 points) and 2017 (-0.1 points). In light of the downbeat forecast and weakening oil prices, the Canadian dollar fell to 76 US cents.
• The Canadian consumer price index (CPI) rose 1.0% (Y/Y) in September, decelerating from the 1.3% increase in August. The core measure of inflation was up 2.1% relative to last September matching August’s increase.
• Canadian retail sales increased 0.5% (M/M) in August, rising for a fourth consecutive month. In real terms, sales were up a stronger 0.7

  For further information, please contact:

  John Maveety Manager, Residential Mortgages – Greater Ottawa Area TD Canada Trust
  T: (613) 371-1984 F: (888) 899-1984 P: (866) 767-5446 
  John.Maveety@td.com