HIGHLIGHTS OF THE WEEK – Jan 21
• The carnage in equity markets continued this week. News that sanctions on Iran could be lifted as early as this weekend sent prices for both WTI and Brent to new 12 year lows below $30 a barrel.
• U.S. retail sales data for December disappointed expectations, declining 0.1%. As a result of the weak data flow, our estimate for fourth quarter real GDP growth has fallen to just 0.5% (annualized) in the fourth quarter.
• Despite the apparent weakness, it is not time to give up on America’s continued growth or its domestic demand fundamentals. Importantly, job growth has maintained momentum and in combination with weak inflation has led to strong real income growth that will sustain modestly above trend economic growth over the next year.
• It was another down week for Canadian markets as oil broke below $30 U.S., leading the loonie below 69 cents U.S., a level not seen since April 2003.
• The housing market appears to have taken a breather in December, with both housing starts and existing home sales down on the month.
• The latest Business Outlook Survey painted a mixed picture, as the outlook for sales remained sturdy but investment intentions swung into negative territory.
• Against a weakened economic outlook and a slow adjustment cycle, we expect the Bank of Canada to reduce its policy rate to 0.25% at its January 20th meeting.
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