HIGHLIGHTS OF THE WEEK – Sept. 10
- The European Central Bank announced yesterday that it will be cutting its policy rate by 10 basis points (bps), taking the refinancing and deposit rates down to 0.05% and -0.20%, respectively. In addition to the across the board rate cuts, ECB President Mario Draghi also announced two new programs for buying asset backed securities (ABS) and covered bonds issued by Eurozone banks.
- The August reading of total non-farm employment disappointed even the most pessimistic forecast, coming in at 142k jobs – well below the consensus forecast of 230k. The unemployment rate ticked down 0.1 percentage points to 6.1%, as the participation rate fell back to its historical low of 62.8%.
- Other economic data released this week was more encouraging, with both the ISM manufacturing and non-manufacturing indices surprising to the upside, while vehicle sales soared to 17.45M units. The U.S. trade deficit narrowed by a modest $264M in July to $40.6B, as strong exports (+0.9%) helped to outpace more modest import (+0.7%) growth.
- Canada’s economy is blowing hot and cold these days. The August employment report was another ho-hum result, showing that labour market trends are far from inspiring.
- On the plus side Canada’s exporters were running full steam in July. Canada’s trade surplus in goods is starting to look a little more established.
- The Bank of Canada examined its tea leaves and decided the economy was unfolding as expected, and that it isn’t ready for a monetary policy shift just yet. The Bank is waiting for export strength to trigger business investment and stronger hiring. So far, there is little evidence of either, so the Bank can comfortably stand pat for a while yet.
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) 767-5442