HIGHLIGHTS OF THE WEEK – Dec 16

United States

• It was a generally dour week in financial markets with equity indexes reeling from concerns over global
growth amidst a further rout in global commodity prices.

• The Federal Reserve will meet next week. The broad consensus is it will raise their policy rate for the first time since 2006. The pace of rate hikes is likely to be gradual. From a starting point of 0.50%, we expect the top band for the federal funds rate to rise to 1.25% by the end of 2016.

• Inflation will be a key concern for the Fed as it begins its tightening cycle. A stabilization in energy prices
and the dollar, alongside continued labor market improvement should lead inflation to move higher over
the next year.

Canada

• Further declines in oil prices this week have fed through to other markets, as the TSX, loonie, and government bond yields all fell in a relatively quiet week for domestic data.

• Governor Poloz spoke this week on the unconventional tools available to the Bank of Canada. The lower bound for interest rates is now seen as -0.5%, but the Governor stressed that negative interest rates aren’t in the cards for now.

• Housing starts were up markedly in November, helped along by a rules change in Alberta. Mortgage
rules were also tightened, with increased down payments required for insured mortgages above $500K.
Longer-term, this change is likely to be minor as rising borrowing costs are expected to be the key driver
of a cooling housing market in coming years.

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