TD/Canada Trust Economic Highlights – June 2


United States

  • The second estimate of Q1 real GDP was revised down to -1.0% annualized, from an initial estimate of +0.1% and below market expectations for -0.5%.

  • While Q1 was a disappointment, the January-March period is in the rearview mirror. High frequency data for Q2 paint a picture of an accelerating economy. The S&P500 echoes this view, reaching a new record this week.

  • Given weak inflation in Europe, the European Central Bank is expected to cut rates next week, bringing its deposit rate into negative territory. Expectations for additional easing have weakened the euro and provided a bid to fixed income. 


  • The drop in Canadian 10-year government bond yields – to a mere 2.2% – this year has been one in a list of financial market surprises. However, the case for moderately higher yields in the second half of 2014 remains strong in our view.

  • The Canadian economy grew at 1.2% on a Q/Q annualized basis in the first quarter. This represents a marked deceleration relative to the 2.7% showing in Q4, as mother nature made sure Canadians spent their time shoveling instead of shopping. Year-over-year growth remained at a modest 2.2% pace, just above the Bank of Canada’s estimate of the economy’s potential growth.

  • Despite a modest growth backdrop and a harsh winter, Canadian corporate profits posted their strongest quarterly increase.

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]