TD/ Canada Trust Economic Highlights – Jan 11


United States

• For global investors 2016 has so far been off to a rocky start. Global equities lost more than $2 trillion, before recovering somewhat, as a slump in Chinese equities triggered unease across other bourses.

• The selloff in China was related to both a weakening macroeconomic backdrop as well as immature policy choices which may have exacerbated the panic.

• U.S. data did little to inspire confidence early in the week, with manufacturing and non-manufacturing ISMs deteriorating. But, this was more than made up for by the resounding strength in the labor market. Jobless claims reversed last week’s uptick, while the American job machine created 292,000 positions in December. Alongside positive revisions, this capped off the second best year of hiring this century, after last year’s spree.


• Canadian markets continue to price in the probability of another rate cut by the Bank of Canada this year. Governor Stephen Poloz’s speech this week offered little guidance either way, suggesting only that the central bank still has tools under its belt to fight economic risks, should they arise.

• While risks of a rate cut are on the rise, there are still plenty of reasons to argue against it. For one, some of the Canadian economic weakness in Q4 (real GDP growth is currently tracking near-0%) is likely to prove temporary. Second, the unemployment rate held steady at 7.1% in December, offering little reason to be concerned. At this point, we turn to next week’s Business Outlook Survey to provide more guidance on what to expect from the Bank of Canada.

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 
[email protected]