TD/ Canada Trust Economic Highlights – Oct 19


United States

  • The notion of a 2015 Fed liftoff in rates continued to be under pressure this week with markets pricing only a one-in-three chance of a rate hike this year.
  • Much of the repricing was related to dovish comments from two Fed Governors, who questioned the Phillips Curve and highlighted international risks, suggesting that a delay to liftoff is a prudent approach. The cautious approach was further supported by weak retail sales data capping off the third quarter.
  • Still, despite some weakness in regional manufacturing PMIs, with the Empire and Philly indices both disappointing, domestically-oriented data was far more upbeat. Core inflation accelerated, consumer sentiment improved, and jobless claims hit another cyclical low suggesting continued labor market strength.


  • Economic data this week supported the view that the Bank of Canada will remain on hold at next week’s FAD meeting.
  • Despite the disappointing headline, the August manufacturing data released this morning fit comfortably with our estimate of real GDP growth of 2.5% annualized in the third quarter, which is significantly stronger than the 1.5% gain the Bank of Canada was expecting back in July.
  • Housing data released this week suggests that the market may be losing some steam, and may potentially alleviate some of the concerns related to keeping rates too low for too long. Existing home sales fell 2.1% in September and were only up 0.7% from year ago levels, while average existing home prices rose by just 6.2% year-over-year in September, following six months of near double-digit gains.

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