TD / Canada Trust Weekly Economic Highlights – Sept. 29

HIGHLIGHTS OF THE WEEK – Sept. 29

United States

  • In one of the most highly anticipated FOMC meetings in years, the U.S. Federal Reserve surprisingly stayed the course on its monthly asset purchases.
  • This caught financial markets off guard, as investors were almost universally expecting the Fed to start reining in its QE program.
  • The immediate market reaction led to sharp price changes across the board. For instance, 10-year Trea­sury yields dropped 16 basis points after the announcement and gold jumped by 4%.
  • Over the last two days, investors have digested the Fed’s rationale, causing them to partially reverse previous sharp movements in risk-assets’ prices.

Canada

  • After Bank of Canada Governor Stephen Poloz gave an economic pep talk on Wednesday, U.S. Federal Reserve Chair Ben Bernanke killed the buzz by not beginning the widely expected “taper” of its asset purchases.
  • But, beneath the din of Fed furor, both Canadian wholesale and manufacturing sales data showed a re­bound in July after weakness in June. This lends credence to our forecast for better Canadian economic growth in Q3.
  • Friday saw another benign reading on Canadian inflation for August. This suggests that Governor Poloz’s activities will be confined to pep talks for awhile yet, with interest rates hikes unlikely before late 2014.

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