• After last week’s news that Canada’s economy contracted in Q1, Friday’s positive job reports in both Canada and the U.S. helped underpin another leg up in bond yields. The Loonie didn’t gain any ground, however, as U.S. dollar strength ruled the day.
• Earlier this week, Canada’s smaller trade deficit seemed positive, but the headline belied a loss of momentum in both export and import volumes.
• Canada’s economy generated a surprising 59K new jobs in May, with generally positive underlying details. However, the story of regional divergence along oil producing-consuming lines is evident in Alberta’s rising unemployment rate, while Ontario’s continues to trend down.
• In the press conference following this week’s ECB meeting, Mario Draghi stated that the market should get used to periods of high volatility, implying that he wouldn’t be leaning against the recent pickup in bond yields. This led to a powerful sell-off in European fixed income, with Treasuries following in tow.
• Data from the ISM surveys was mixed, while the Beige Book indicated a steady pace of expansion from the first quarter. Still, there were signs of optimism with May auto sales reaching a ten-year high of 17.7 million units.
• Optimism received another boost on Friday, with non-farm payrolls rising 280k in May, smashing expectations for 226k. Average hourly earnings rose 0.3% month over month, and combined with the growth in payrolls, aggregate wages expanded a robust 0.6% on the month.
Thank you TD Bank for your insight.
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