HIGHLIGHTS OF THE WEEK
- The Chinese stock market once again grabbed headlines, with the Shanghai composite dropping 8.5% on Monday before stabilizing somewhat, highlighting the challenge facing the authorities’ attempts to corral the immature market in the face of a slowing economy.
- U.S. economic growth was revised up to 0.6% in Q1, before accelerating to 2.3% in Q2. While the 1.5% gain during the first half is not red-hot, it is respectable in light of the headwinds faced by the U.S. economy.
- These headwinds should abate and be increasingly offset by strength in consumption and housing, with growth expected to accelerate in the second half of the year.
- The improving economy should provide the Fed with enough confidence to begin raising rates this year, with the FOMC now looking for only “some” additional improvement in the labor market before liftoff.
- Canadian financial markets received a welcome break after a rate cut, renewed weakness in oil prices and the loonie hitting multi-year lows had kept traders on their toes earlier in the month. There was still a reasonable amount of economic data for analysts to sift through.
- Notably, the monthly GDP data showed that the economy contracted for the fifth consecutive month in May. A contraction in the second quarter is now a near arithmetical certainty.
- Canada’s economy is still smarting from the blow of $50 oil prices, but there are some silver linings which boost the outlook. Lower interest rates and a weaker Canadian dollar will provide a boost to many sectors and help the economy return to growth in the second half of the year.
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