HIGHLIGHTS OF THE WEEK – Jan 25

United States

• It was yet another rollercoaster week for global financial markets. Dour mood prevailed in the first half of the week, as equities sold off, WTI plunged below $27/barrel and key volatility gauges rose sharply.

• Despite the deteriorating inflation expectations and downside risks to growth, the ECB stood pat this week. However, Draghi signaled that additional measures are likely in March, helping to revive the sentiment.

• The Fed is expected to remain on the sidelines next week, while downside risks to inflation, heightened financial volatility and lackluster growth at the end of 2015 likely to slow the pace of rate hikes this year.

• CPI metrics remained relatively subdued in December, held back by strong dollar and low oil, but services inflation is gathering steam. December housing data was also encouraging, pointing to continuous recovery in the housing market.

Canada

• The Bank of Canada held the line on interest rates this week and downgraded its outlook for 2016. It now expects economic growth to advance by 1.4% this year, before accelerating to 2.4% in 2017.

• Both manufacturing (+1.0%) and retail (+1.7%) sales surprised on the upside in November, with volumes of each also recording similar gains.

• The WTI crude oil benchmark sank to US$26 per barrel for the first time since 2003. However, it rebounded to above US$31 per barrel by the week’s end. The Canadian dollar followed oil prices, hitting a low of 68 US cents mid-week before bouncing back above 70 US cents on Friday.

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