TD/ Canada Trust Economic Highlights – February 7


United States
• Political events and communiqués from the new administration, continued to dominate the headlines –
taking some of the attention away from what was a week of upbeat economic data.
• The FOMC held rates steady this week, but remained upbeat about the economy – pointing to continued
improvement in the labor market. This narrative was corroborated by this morning’s employment report,
which blew expectations of 180K out of the water as payrolls rose by 227K.
• In the near term, we expect the Fed to remain on the sidelines in order to observe how the economy
behaves under heightened policy uncertainty. If the economic expansion continues at the moderate but
above trend pace of growth, we expect the Fed to hike around the mid-year mark. By that point some of
the missing pieces from the policy puzzle should have fallen into place.

• According to Canada’s leading rodent forecaster, we are in for an early spring. And while Canada’s
economy is not out of the shadows yet, data out this past week showed that it did spring back into action
in November.
• Real GDP rose 0.4% in November, led by a rebound in the goods sector. Canada’s economy picked up
momentum in the second half of the year, as the good sector has improved against a back drop of consistent
growth in services.
• Bank of Canada Governor Poloz expressed concerns about both the move up in Canadian bond yields
and the level of the loonie. This underscored the dovish stance of the Bank, given the risks to growth are
primarily to the downside. A significant shock, or series of smaller shocks could see the Bank cut again.

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