TD/ Canada Trust Economic Highlights – Sept 23


United States

  • Financial markets were focused on the Federal Reserve and the referendum on independence in Scotland. The victory for the no-side was greeted fondly in U.S. equity markets with a rally to end the week.
  • The Federal Reserve’s statement was decidedly dovish with little reference to improved economic momen­tum. Their updated projections on the other hand, went the other direction, pointing to a faster increase in interest rates than is currently being priced in financial markets.
  • There is reason to take the FOMC’s rate projections with a grain of salt. With little in the way of inflation­ary pressures and a considerable degree of labor market slack remaining, we expect a slower pace of tightening than is reflected in the median Fed “dot”.


  • The Canadian dollar faced a number of major events this week, but came out on top, with modest gains against the U.S. dollar masking an even better performance against other major currencies.
  • A big part of the U.S. dollar story in recent weeks reflects the attraction of higher U.S. government longer-term bond yields relative to other G-7 countries. This past week, a modest narrowing in U.S.-Canada yield spreads, along with supportive Canadian economic data, likely provided a boost to the Loonie.
  • In line with weaker demand for Canadian government bonds, Canada’s TSX traded generally lower on the week and may instead reflect the generally weaker commodity price environment currently.

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