The Wrap Up – Rates to Increase
by Kevin Anseeuw on 03.13.2017
An inevitable pull back in equity markets hit all major indices in North America last week and gold and oil dropped as well. In the US, discussion regarding the Federal Reserve’s intention to raise interest rates has continued to grow and as a result stock prices fell. The Fed is concerned that the US economy will continue to grow when President Trump’s infrastructure rebuilding program takes effect and also since the 235,000 jobs created in the US in January beat forecasts. It is believed that continued demand for materials and job creation will create inflation, which the Fed will aim to prevent with interest rate hikes.
In Canada, interest rate changes are much less certain than in the US, with Stephen Poloz, Governor of the Bank of Canada, not willing to indicate his intentions. In positive news, the Canadian economy continued its recent trade surplus and added over 15,000 jobs which lowered its unemployment rate in January.
This week in the US, all eyes will be on the Federal Reserve which has a monetary policy announcement; the expectation that interest rates will rise is nearly universal. This week in Canada, real estate sales and manufacturing data will be released but it will likely be overshadowed by news of the expected interest rate increase in the US.
An interesting point of interest for those effected by daylight savings time – the Monday following the change is among the most dangerous days to be on the road as we all suffer from the effects of jet lag, so be careful.
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