TD/ Canada Trust Economic Highlights – Dec. 15


United States

       It was a crude week for markets, with the S&P500 and DJ30 falling by 2.8% and 2.7%, respectively. Oil was also pushed considerably lower, as growing inventories and downwardly revised OPEC and EIA demand forecasts weighed on the price of the barrel.

       In Europe, the second of eight Targeted Long-Term Refinancing Operations (TLTROs) took place on Thursday, resulting in the ECB injecting nearly €130B into the euro zone’s banking system. So far, both auctions have fallen well short of expectations, leaving many to believe that more accommodation will be required from the ECB over the coming year.

       U.S. retail sales surprised to the upside in November, with both the headline and core measures coming in well above expectations at 0.7% m/m and 0.6% m/m, respectively. Revisions were also positive, with both September and October readings having been revised higher.


       Crude oil dropped further this week, with the price declining more than $5 relative to last week’s close. Con­sequently, the S&P/TSX composite index continued its recent downward trend, falling more than 4% on the week.

       The Bank of Canada released its semi-annual Financial System Review. Elevated personal debt levels and lofty house prices remain the key risks facing the Canadian economy. In a change from past reports, the Bank provided an estimate of overvaluation, suggesting that house prices could be as much as 30% overvalued.

            •       Despite these warnings, the Canadian housing market remains robust. Housing starts reached 195.6K 
           in November, while home prices were up more than 5% year-on-year.

For further information, please contact:

      John Maveety Manager, Residential Mortgages – Greater Ottawa Area
TD Canada TrustT: (613) 371-1984 F: (888) 899-1984 P: (866) 767-5442