TD/ Canada Trust Economic Highlights – June 27


United States

• Markets were on tenterhooks all week in anticipation of the British referendum, with anxiety turning to
panic overnight as Britain, in a historic vote, decided to leave the European Union (EU).
• Central banks announced readiness to deal with any fallout related to potential liquidity shortages, helping
stem near-term pressures in global markets but longer-term implications of the vote are far from certain.
Still, there is little doubt that the economic implications are a net-negative and could be far reaching.
• In her semiannual testimony to Congress mid-week, Chair Yellen noted the potential for “significant economic
repercussions” of such an outcome that could “usher in a period of uncertainty,” and negatively
affect U.S. economic activity, with the Fed likely to monitor global developments closely.
• Given the implications for slower U.S. growth and lower inflation, on account of the fallout, we expect the
Fed will stay pat through the rest of the year.


• Canadian financial markets are feeling the effects of the UK vote to “Leave” the EU. The Canadian dollar,
oil and the TSX all fell on Friday morning.
• The Canadian economy will be affected primarily through confidence channels and financial linkages,
with growth likely to be slightly weaker than previously forecast. The vote also means the UK will not be
a part of the CETA agreement Canada signed with the EU.
• Canada’s finance ministers also agreed to significant enhancements to the CPP, aimed at addressing a
shortfall in savings among middle income earners. The impact is likely to be felt in reduced compensation
over time, rather than lower employment.

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