TD/ Canada Trust Economic Highlights – June 22


United States

  • The two main questions currently facing financial markets – whether Greece will default and whether the Fed will raise interest rates – were front and center in the news this week. Unfortunately, more questions than answers were provided.
  • In Europe, talks between euro area finance ministers failed to reach a conclusion. An emergency summit has been scheduled for next week. Meanwhile, the ECB raised the cap on its emergency liquidity assis­tance, but only through early next week. If a deal is not made, capital controls become increasingly likely.
  • The Federal Open Market Committee’s statement gave no clear indication on future rate hikes. The economic assessment was modestly better, but was offset by lower projections for the fed funds rate. As long as economic growth accelerates, and we anticipate it will, the Fed will raise rates in September.


  • Canadian financial markets were a beacon of stability this week, with the loonie looking to end the week roughly unchanged and Canadian bond yields down only modestly.
  • But the steadiness in financial markets masked a divergence in Canadian economic releases. On the plus side, May housing activity remained strong, although contractions in the retail and manufacturing sectors in April are keeping optimism in check.
  • These indicators support our view that economic growth should remain lackluster through the second quarter of the year, advancing by a modest 1% annualized. But with the oil price weakness largely behind us, economic growth is likely to top 2.5% in H2 2015, on strong export growth and renewed business investment.

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