TD/ Canada Trust Economic Highlights – July 4


United States
• Some stability has returned to financial markets this week, following post-Brexit selloff. Volatility has subsided
and equities rallied, with the S&P 500 erasing much of its Brexit-related losses.
• Economic data were also encouraging. Personal spending rose by a solid 0.4% m/m in May, coming on
the heels of an impressive 1.1% m/m gain in April, while initial jobless claims suggested robust job growth
• The U.S. economy should remain relatively well-insulated from Brexit-related spillovers, but some drag
may manifest in the second half of year. Still, the impact is expected to be modest, lowering growth by
just 0.1 percentage point relative to our earlier forecast.
• The stronger dollar, coupled with increased uncertainty and slower global growth will likely dampen
whatever appetite the FOMC may have had to raise rates in the near-term. Still, the Fed will not sit on the
sidelines indefinitely, and can sneak in a rate hike in early 2017, or even in December.

• After sliding further on Monday in response to the UK decision to leave the EU, financial markets got some
reprieve throughout the rest of the week, with a relief rally erasing much of the lost ground.
• Within the commodity spectrum, energy and industrial metals prices are likely to be most adversely impacted
by the Leave vote, while precious metals prices will benefit from the referendum outcome.
• Canada will not be immune to the fallout from the referendum outcome; however the impact on the economy
will be relatively contained, and unlikely to alter the Bank of Canada’s monetary policy stance.

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