TD/ Canada Trust Economic Highlights – May 29


United States
• Despite the upward revision to first-quarter GDP growth, with the second estimate indicating a 1.2% annualized
gain on stronger consumption and investment, market reaction was relatively subdued given
that the overall story is largely unchanged.
• Although investors are almost fully pricing in a June rate hike, the yield curve flattened this week as longerterm
growth prospects became murkier and the Fed communicated that the balance sheet unwinding
process would be protracted.
• Strength in consumption should leave the U.S. economy 3.3% larger this quarter, for an average growth
of 2.2% during the first half of the year. While this is far from red-hot, it nonetheless is enough to reduce
slack and should enable the Fed to continue along its gradual rate hike path.

• News and data were thin ahead of the BoC’s monetary policy decision this week, but what little there was
served to confirm our expectation of strong Canadian economic performance for 17Q1.
• Next week we expect Statistics Canada to report economic growth of about 4.0% (annualized) in the
first quarter. This strong expansion is expected to be largely driven by consumer spending and business
• With excess capacity quickly being absorbed, a rate hike by the BoC is likely happen as early as 18Q2.
Combined with firming energy prices, this should help provide a lift to the Canadian dollar. The bid on the
Canadian dollar following Wednesday’s monetary policy statement suggests maybe the time has come
to buy Canada.

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