TD Canada Trust provides a weekly economic highlight report that we choose to share with our clients and those who follow us. This is an easy place to stay current on the broader economic conditions in Canada and the U.S. so that you are better informed to make stronger decisions around your own real estate investments. We are always available to answer any questions or walk through your real estate investment goals for now or in the future.
- It was a loaded week on the Canadian economic calendar. The Trans Mountain pipeline project was approved. Construction will take time, but this will eventually help to alleviate pipeline bottlenecks.
- Inflation surprised to the upside in May, rising to 2.4%. The average of the Bank of Canada’s core measures also moved above 2.0% (to 2.1%) for the first time since 2012.
- Manufacturing and retail sales volumes dipped in April, but are still stronger so far in Q2 compared to Q1, leaving the recovery narrative on track.
- The biggest event this week was the Fed’s pivot away from patience. It is now poised to act in the event of a further deterioration in the outlook. This cheered markets, with stocks and bonds rallying.
- The Fed’s dot plot also showed that the majority of FOMC members judge the funds rate to already be at its long-run neutral level, and expect to lower rates next year. This is a seismic shift from expecting hikes back in December.
- Our new forecast released this week, calls for the Fed to cut rates twice this year, as insurance against the downside risks that have accumulated due to trade tensions, and a late-cycle economic slowdown.