HIGHLIGHTS OF THE WEEK – Nov 5

United States

• The Federal Reserve took the center stage this week. The FOMC statement struck a more hawkish tone,downplaying concerns about the global economic backdrop and sounding more upbeat on the domestic economy. The Fed has also explicitly signaled the possibility of a December rate increase, pushing the market-implied probability of this event from 38% prior to the meeting to 50% in its aftermath.

• Advance estimate of GDP growth in Q3 was consistent with the Fed’s view of domestic economic momentum. Headline rose by a modest 1.5% (annualized), however the weakness was entirely due to the slowdown in inventory accumulation. Meanwhile, consumer spending sustained a solid expansion, advancing by 3.2%.

• Congress passed a federal government budget deal, which keeps the government funded for two years, modestly increases spending, and suspends the debt ceiling until March 2017. The deal will be a net positive for the economy both directly and through reduced fiscal uncertainty.

Canada

• Energy prices were hit hard early in the week, with natural gas prices hitting a 3½ year low and crude oil prices hitting a 2-month low. Both markets are amply supplied, which has kept prices under pressure in recent months. By the week’s end, prices of each commodity recovered the ground lost.

• The low energy price environment has had a profound impact on Alberta’s government coffers, with the province expected to move from a $1B surplus position to an estimated $6.1B deficit position.

• The Canadian economy grew by 0.1% in August, extending its streak of advances to three months, following five months of contraction. Third quarter growth is tracking 2.5%, which is right in line with the Bank of Canada’s latest forecast.

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]