HIGHLIGHTS OF THE WEEK – June 20
• Global bond yields continued to drop this week, with the German 10-year yield moving negative for the
first time and the U.S. 10-year dipping as low as 1.54% before edging up slightly at the end of the week,
pulled down by “Brexit” fears.
• The Federal Open Market Committee left rates unchanged at their meeting on Wednesday, noting the
slowdown in job growth and heightened global economic uncertainty.
• The real fireworks in the Fed’s release were in the survey of economic projections (SEP). Fed members’
expectations for future policy rates migrated lower across the forecast horizon. The median projection for
2016 continued to be for two rate hikes, but there are now six dots below the median (projecting only one
rate hike), up from only one previously. The downward movement was even more pronounced in 2017 and
2018 with the median estimates implying just three rate hikes (from four) in each of the next two years.
• The Alberta wildfires will help pull economic growth down to just 1.3% in 2016, barely above 2015’s 1.1%
pace. Underlying momentum remains positive: on a fourth quarter over fourth quarter basis, growth of
1.7% is expected, a marked pick-up from last year’s 0.3%.
• Underscoring the momentum, new manufacturing orders trended higher in April, led by durable goods
orders that should help keep factories humming in the coming months.
• With business investment out of the picture and consumers increasingly tapped out, exports are expected
to play an important role in economic growth in the coming quarters, helped by the favourable level of the
exchange rate and growing U.S. demand.
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