Rates on the Rise?

Good day,

Last week, the leaders of central banks from countries around the world met in Jackson Hole, Wyoming for their annual symposium.  Janet Yellen, the Chair of the U.S. Federal Reserve, indicated that the American benchmark rate would be raised. “In light of the continued solid performance of the labor market and our outlook for economic activity and inflation, I believe the case for an increase in the federal funds rate has strengthened in recent months”.  The result was predictable from these remarks.  Stock markets declined, albeit only slightly in North America, since some believed that the interest rate change could occur as early as next month, but realistically December seems more likely.  Gold was also down on fears that capital could be shifted out of gold and into American fixed income.  We are monitoring the changing environment and we are not suggesting any changes at this point.

This week two important indicators will be released.  Gross domestic product, which will show the lingering effects of Fort Mac, the overall oil slow-down and the strength of the Canadian economy based on how much was actually produced in the second quarter of 2016.  The U.S. monthly jobs data will also be released, and coupled with chairperson Yellen’s comments about the strength of the labor market in the U.S. this could be the trigger and justification for the long-awaited interest rate rise.

Have a great week!

Kevin

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