TD / Canada Trust Weekly Economic Highlights – Nov. 4

HIGHLIGHTS OF THE WEEK – Nov. 3

 United States

  • This week marked an uneven performance in U.S. stock markets. While markets rallied earlier in the week,a more-hawkish-than-expected statement from the FOMC put the breaks on the upward momentum. The S&P 500 was flat relative to last week’s close, while bond yields were up by 8 basis points.
  • The data backlog continues to clear, with September CPI and retail sales reports released this week.With these latest releases, we now have a pretty good view of the performance of the consumer in the third quarter as a whole. Real consumer spending likely rose by 1.7% in Q3, down from 1.8% in Q2.
  • While the economy is unlikely to improve much in the fourth quarter, there is every reason to believe it will do so over the next year. Signs that the U.S. economy is gathering strength from the housing market to the manufacturing still remain in place.

Canada

  • Since last week’s interest rate announcement by the Bank of Canada, the Canadian dollar has been on a downward trek. We continue to anticipate this retrenchment in the currency to intensify over the coming 12 months.
  • Two key themes underpin our view: the U.S. economic outperformance relative to Canada through 2014, and a strengthening of the U.S. dollar once the Federal Reserve begins tapering its Quantitative Easing program next year.
  • Elsewhere in the economy, data for real GDP indicated the Canadian economy expanded by 0.3% in August. This is mostly consistent with the moderate growth environment Canada has been in over the past few quarters.

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