Global Insight. Daily. Good morning

Transcription

1 Daily Global Insight Friday, December 9, 2016 Good morning Global equities are consolidating their recent gains as risk appetite is ending the week on a more restrained note with futures on the S&P 500 fluctuating around flat-line at the pre-market. Asian indices finished mixed as gains in Japan (+1.2%) and China (+0.5%) countered losses in Hong Kong (-0.4%) and South Korea (-0.3%). The South Korean parliament last night voted 234 to 56 to impeach President Park Geun-hye over a corruption scandal, which had prompted mass protests demanding her resignation, with Prime Minster Hwang Kyo-ahn set to assume her duties as acting president. European bourses are mixed at the mid-point of the session with consumer staples and info tech sectors outperforming autos and banks. Gold (-0.5%) is lagging crude oil (+0.5%) and copper (+0.8%) in the commodities complex as the U.S. Dollar Index (+0.5%) resumes its upward climb. Price action in core government bond markets remains soft with yields on U.S. 10-year Treasuries edging up two basis points to 2.43%. Today, we would highlight the following: Chinese inflation signals potential upside for domestic corporate profit outlook. China s annual consumer price index increased to 2.3% in November, up from 2.1% in the previous month and ahead of the 2.2% consensus forecast, thanks in large part to higher food prices. While consumer inflation remains benign, the mild uptick reinforced the view that the central bank is unlikely to ease monetary policy any time soon. More importantly, China s annual producer price index soared to 3.3% in November, up from 1.2% in the previous month and the strongest reading since November The sharp rebound in producer prices was in part due to stabilizing domestic demand, but also due to outsized price spikes for industrial commodities such as coal and steel, which some economists caution might not be sustainable. Regardless, the return of producer price inflation, after a multi-year period of deflation, comes as positive news for the near-term outlook for Chinese corporate earnings, as improving pricing power should translate into higher cash flows. Investors pile into floating-rate bank loans in anticipation of higher interest rates. Data from EPFR revealed that investors pumped $1.7 billion into fund products invested in leveraged bank loans, floating-rate debt securities that can help provide some degree of protection in an environment of rising interest rates, in the week to December 7, the strongest inflow since U.S. bond yields have moved sharply higher in recent weeks as financial markets are anticipating that U.S. President-elect Donald Trump s proposed policies will help to bolster growth and inflation in Meanwhile, the Federal Reserve is expected to hike the short-term interest rate by 25 basis points at its meeting next week. In stark contrast, expectations of higher rates have weighed on emerging market asset classes, as investors pulled $1.8 billion from emerging market equity fund products and $2.4 billion from emerging market bond products in the past week. All values in CAD dollars unless otherwise noted. Priced as of 7:26 a.m. on December 9, 2016 (unless otherwise stated). For important disclosures please see page 10.

2 2 Global Insight Daily Friday, December 9, 2016 Markets today Equities So far it has been another day of gains for global equities as risk assets react positively to the ECB s decision to extend its bond-buying program. S&P 500 futures are little changed ahead of the open. Fixed income In a press conference following the ECB s rate decision yesterday, ECB President Mario Draghi provided clarity on the parameters of the central bank s amended quantitative easing program. 5- and 10-year Government of Canada bond yields are 43 and 70 bps higher respectively since September 30 and this move higher in yields has created an opportunity to invest money at higher yields. Market Pulse Updated as of Advancers and Decliners 12/9/16 7:26 AM Updated as of 12/9/16 7:26 AM Equity New Last % Chg S&P/TSX Top Movers Dow 19, % Advancers Last % Chg S&P 500 2, % INTERFOR CORP $ % Nasdaq 4, % ENDEAVOUR MINING CORP $ % WESTERN FOREST PRODUCTS INC $ % Overseas Last % Chg LABRADOR IRON ORE ROYALTY CO $ % FTSE 100 (UK) 6, % DH CORP $ % DAX (Germany) 11, % Euro Stoxx 50 3, % Decliners Last % Chg Hang Seng 22, % PROMETIC LIFE SCIENCES INC $ % Nikkei , % ALACER GOLD CORP $ % Shanghai 3, % TECK RESOURCES LTD-CLS B $ % INTERTAIN GROUP LTD/THE $ % Commodities Last % Chg CONSTELLATION SOFTWARE INC $ % WTI Crude $ % Gold ($/oz) $1, % S&P 500 Top Movers Silver ($/oz) $17-0.7% Advancers Last (USD) % Chg Copper ($/ton) $5, % EDWARDS LIFESCIENCES CORP $ % Natural Gas($/Mmbtu) $ % UNDER ARMOUR INC-CLASS C $ % UNDER ARMOUR INC-CLASS C $ % Currencies Last % Chg QORVO INC $ % CADUSD $ % TYSON FOODS INC-CL A $ % EURUSD $ % USDJPY % Decliners Last (USD) % Chg WYNN RESORTS LTD $ % Fixed Income Yield Chg (bps) EXPRESS SCRIPTS HOLDING CO $ % 10-yr Treasury 2.43% 2.6 NORTHROP GRUMMAN CORP $ % 10-Yr Canadian 1.70% 3.7 NIELSEN HOLDINGS PLC $ % Germany 10 Yr Yield 0.37% -1.4 MONSTER BEVERAGE CORP $ % Spain 10 Yr Yield 1.51% 1.0 France 10 Yr Yield 0.83% 2.1 Source: Bloomberg

3 3 Global Insight Daily Friday, December 9, 2016 Strategy and economics Key developments Key U.S. Economic Data Releases Event Period Survey Actual Prior Commentary Wholesale Inventories Oct. F -0.4% % Changing inventory levels can significantly influence GDP growth with inventories subtracting 1.2% of second quarter GDP and adding 0.5% to third quarter growth. Expectations are for a second straight month of declines in October, an inauspicious start to the fourth U. of Michigan Sentiment quarter. Dec. P Expectations are for sentiment to continue to improve into December, after all measures of consumer sentiment saw strong increases in November after the election. Prior Session Highlights & Analysis Event Period Survey Actual Prior Our Thoughts Initial Jobless Claims Dec k 258k 268k Fewer People File For Unemployment Benefits Continuing Claims Nov. 26 2,048k 2,005k 2,081k Consumer Comfort Dec Initial jobless claims fell last week, after a 33k surge over the Thanksgiving week reinforcing the picture of a healthy labor market. The tight labor market has put a premium on skilled and experienced workers, which helps explain why companies have held on to current workers, even amid a 6 quarter earnings recession. Initial jobless claims have now remained below 300k for 92 consecutive weeks, the second longest streak on record. Source: RBC Wealth Management, Bloomberg Consumer comfort improved last week, with Americans feeling the most optimistic about the economy since early last year. Headline comfort advanced 45.1 and the buying climate gauge improved to the highest level in 3 months a positive sign that consumers will open their wallets and spend this holiday season.

4 4 Global Insight Daily Friday, December 9, 2016 RBC Capital Markets Daily Deck The just-released Q3 Fed Flow of Funds really highlights a theme we have been promoting for the better part of the current economic expansion and something that remains true today. Household balance sheets remain quite healthy and now with the prospect of firming cash flow via wage growth (resulting from an incrementally tighter labor market) and potentially significant tax relief, this could reaccelerate the current economic expansion and make it by far the longest of the post-war era. Let s start with the fact that Household net worth continues to print fresh record highs and is currently sitting at a whopping $90 trillion But while that is impressive, what is even more significant is that net worth continues to outpace economic growth by significant margins. Household net worth relative to the size of the economy also just took out the prior record high from Q and is now sitting at 4.83x nominal GDP Source: RBC Capital Markets US Economics, BLS, Haver

5 5 Global Insight Daily Friday, December 9, 2016 Technical corner Bob Dickey: Rate Top or Not The Fed meets next week, and expectations are high for an interest rate increase, for which the market has made a recent strong vote of confidence it will happen, with the big increase in the 10-year Treasury yield over the past month. This recent increase in interest rates does not make a Fed move certain, however, as there have been many bounces in rates over the past 30 years that interest rates have been in decline, with some of those bounces being even larger than the current move. On a technical basis, the 10-year yield has resistance around 2.5% on an intermediate-term basis, and around 3.0% for the longer term. We believe it is that longer-term resistance that is the real dividing line between an overall lower or higher interest rate trend, and is a stronger area of resistance than many may be anticipating. Once again, with the majority of opinions leaning toward the expectation of higher rates, we will take contrary opinion that the recent move is a bounce, and not a trend change, which is a stand that has worked for the past several years.

6 6 Global Insight Daily Friday, December 9, 2016 Market snapshot Calendar of events Date Time Event Survey Actual Prior Revised 12/05/2016 9:45 US Markit US Services PMI Nov F /05/2016 9:45 US Markit US Composite PMI Nov F /05/ :00 US Labor Market Conditions Index Change Nov /05/ :00 US ISM Non-Manf. Composite Nov /06/2016 8:30 US Trade Balance Oct -$42.0b -- -$36.4b -- 12/06/2016 8:30 US Nonfarm Productivity 3Q F 3.30% % -- 12/06/2016 8:30 US Unit Labor Costs 3Q F 0.30% % -- 12/06/ :00 US Factory Orders Oct 2.50% % -- 12/06/ :00 US Factory Orders Ex Trans Oct % -- 12/06/ :00 US Durable Goods Orders Oct F 2.00% % -- 12/06/ :00 US Durables Ex Transportation Oct F 0.50% % -- 12/06/ :00 US Cap Goods Orders Nondef Ex Air Oct F % -- 12/06/ :00 US IBD/TIPP Economic Optimism Dec /06/ :00 US Cap Goods Ship Nondef Ex Air Oct F % -- 12/07/2016 7:00 US MBA Mortgage Applications 02-Dec % -- 12/07/ :00 US JOLTS Job Openings Oct /07/ :00 US Consumer Credit Oct $18.500b -- $19.292b -- 12/08/2016 8:30 US Initial Jobless Claims 03-Dec 255k k -- 12/08/2016 8:30 US Continuing Claims 26-Nov 2048k k -- 12/08/2016 8:45 Bloomberg Dec. United States Economic US Survey 12/08/2016 9:45 US Bloomberg Consumer Comfort 04-Dec /08/ :00 US Household Change in Net Worth 3Q $1075b -- 12/09/ :00 US Wholesale Inventories MoM Oct F -0.40% % -- 12/09/ :00 US Wholesale Trade Sales MoM Oct 0.70% % -- 12/09/ :00 US U. of Mich. Sentiment Dec P /09/ :00 US U. of Mich. Current Conditions Dec P /09/ :00 US U. of Mich. Expectations Dec P /09/ :00 US U. of Mich. 1 Yr Inflation Dec P % -- 12/09/ :00 US U. of Mich Yr Inflation Dec P % -- 12/12/ :00 US Monthly Budget Statement Nov $44.2b -- 12/05/ :00 CA Bloomberg Nanos Confidence 02-Dec /06/2016 8:30 CA Int'l Merchandise Trade Oct -2.00b b -- 12/06/ :00 CA Ivey Purchasing Managers Index SA Nov /07/ :00 CA Bank of Canada Rate Decision 07-Dec 0.50% % -- 12/08/2016 8:15 CA Housing Starts Nov 190.0k k -- 12/08/2016 8:30 CA Capacity Utilization Rate 3Q 81.50% % -- 12/08/2016 8:30 CA New Housing Price Index MoM Oct 0.20% % -- 12/08/2016 8:30 CA New Housing Price Index YoY Oct % -- 12/08/2016 8:30 CA Building Permits MoM Oct 0.70% % -- 12/09/2016 9:00 CA Survey 12/12/ :00 CA Bloomberg Nanos Confidence 09-Dec Source: Bloomberg

7 7 Global Insight Daily Friday, December 9, 2016 Market snapshot Number crunching Equity Indices Index Level Change Change (%) MTD (%) YTD (%) 52-Week (%) S&P/TSX Composite Index 15, % 1.4% 17.6% 18.2% -11.1% 7.4% 9.3% S&P/TSX Composite Index TR 49, % 1.5% 20.9% 21.9% -8.3% 10.6% 13.0% S&P/TSX 60 Index % 1.5% 17.9% 18.1% -10.6% 9.1% 9.6% S&P/TSX Equity Index 15, % 1.4% 17.9% 18.5% -11.3% 7.4% 10.1% S&P/TSX Income Trust Index % 0.9% 6.9% 9.4% -5.2% 7.1% -7.7% S&P/TSX Venture Composite Index % 1.7% 42.6% 48.3% -24.4% -25.4% -23.1% S&P/TSX Small Cap Index % 3.1% 34.6% 38.3% -15.8% -5.2% 4.6% Dow Jones Industrial Average 19, % 2.6% 12.6% 12.1% -2.2% 7.5% 25.5% S&P 100 Index % 2.0% 8.4% 8.1% 0.3% 10.3% 26.4% S&P 500 Index 2, % 2.2% 9.9% 9.7% -0.7% 11.4% 28.5% S&P 400 Midcap Index 1, % 4.2% 21.3% 20.5% -3.7% 8.2% 30.2% S&P 600 Smallcap Index % 5.3% 27.3% 26.2% -3.4% 4.4% 39.7% NASDAQ Composite Index 5, % 1.8% 8.2% 7.9% 5.7% 13.4% 37.2% Euro Stoxx 50 2, % 3.2% -5.8% -5.9% 3.2% 2.9% 12.2% FTSE 100 6, % 2.2% 11.0% 13.0% -4.9% -2.7% 13.9% CAC 40 4, % 3.4% 2.1% 1.1% 8.5% -0.5% 16.1% DAX Index 11, % 5.1% 4.1% 4.7% 9.6% 2.7% 23.5% S&P/ASX 200 5, % 1.9% 4.7% 9.1% -2.1% 1.1% 13.2% Nikkei , % 2.5% -1.4% -2.8% 9.1% 7.1% 56.7% Shanghai Stock Exchange Composite 3, % -1.1% -9.1% -7.4% 9.4% 52.9% -7.0% Hang Seng Index 22, % 0.3% 4.3% 4.9% -7.2% 1.3% -0.3% MSCI World 1, % 2.2% 5.2% 4.7% -2.7% 2.9% 24.1% MSCI World TR 6, % 2.2% 7.9% 6.5% -0.3% 5.5% 27.4% MSCI EAFE 1, % 2.6% -2.5% -2.2% -3.3% -7.3% 19.4% MSCI Emerging Market % 0.6% 9.3% 9.1% -17.0% -4.6% -5.0% Equity Indices (in CAD$)* Index Level Change Change (%) MTD (%) YTD (%) 52-Week (%) DJIA in Cdn$ 25, % 0.7% 7.3% 8.4% 16.4% 17.6% 35.9% S&P 100 Index 1, % 0.1% 3.3% 4.1% 19.5% 20.6% 36.9% S&P 500 Index 2, % 0.3% 4.7% 5.7% 18.2% 21.8% 39.1% S&P 400 Midcap Index 2, % 2.3% 15.6% 15.6% 14.6% 18.3% 41.0% S&P 600 Smallcap Index 1, % 1.7% 19.4% 19.1% 15.1% 15.1% 51.3% NASDAQ in Cdn$ 7, % -0.1% 3.1% 3.2% 25.9% 24.0% 48.6% Euro Stoxx 50 4, % 1.5% -12.3% -11.0% 10.3% -0.9% 26.0% FTSE , % 0.9% -9.6% -8.0% 7.0% 0.1% 24.8% CAC 40 Index 6, % 1.8% -4.9% -4.3% 16.0% -4.2% 30.3% DAX Index 15, % 3.4% -3.1% -0.9% 17.7% -1.2% 38.6% S&P/ASX 200 5, % 1.1% 2.2% 9.6% 4.0% 0.2% 4.0% Nikkei % 1.0% -0.9% 1.8% 29.3% -3.9% 41.6% Shanghai Stock Exchange Composite % -2.7% -18.3% -16.2% 24.6% 6.7% 3.7% Hang Seng Index 3, % -1.5% -0.6% 1.7% 10.6% 9.4% 8.0% MSCI World 2, % 0.3% 0.3% 1.6% 15.8% 13.3% 34.4% MSCI World TR 9, % 0.3% 2.8% 3.4% 18.7% 16.2% 37.9% MSCI EAFE 2, % 0.7% -7.1% -5.0% 15.1% 1.5% 29.4% MSCI Emerging Market 1, % -1.3% 4.1% 5.9% -1.1% 4.1% 2.9% S&P/TSX Sector Performance Index Level Change Change (%) MTD (%) YTD (%) 52-Week (%) S&P/TSX Financials 2, % 2.8% 18.9% 18.5% -5.5% 9.8% 18.4% S&P/TSX Energy 2, % 0.1% 29.9% 34.2% -25.7% -7.8% 9.1% S&P/TSX Materials 2, % 1.6% 42.4% 40.9% -22.8% -4.5% -29.1% S&P/TSX Industrials 2, % 0.9% 23.0% 27.5% -12.5% 20.0% 34.1% S&P/TSX Consumer Discretionary 2, % 3.9% 10.5% 6.8% -3.5% 26.4% 38.6% S&P/TSX Telecom Services 1, % 0.6% 9.8% 5.1% -1.0% 10.5% 7.6% S&P/TSX Information Technology % -2.5% 2.9% 5.3% 14.8% 34.0% 36.0% S&P/TSX Consumer Staples 4, % -0.8% 5.7% 5.9% 11.0% 46.9% 21.3% S&P/TSX Utilities 1, % 0.3% 10.1% 17.5% -7.8% 11.3% -8.7% S&P/TSX Healthcare % -5.4% -78.7% -76.6% -15.8% 30.2% 72.6% S&P 500 Sector Performance Index Level Change Change (%) MTD (%) YTD (%) 52-Week (%) Financials % 5.4% 22.1% 20.6% -3.5% 13.1% 32.5% Health Care % -1.0% -5.9% -4.9% 5.2% 23.3% 38.0% Technology % 1.6% 12.1% 8.6% 4.3% 18.2% 24.9% Industrials % 2.1% 18.2% 18.0% -4.7% 7.5% 35.9% Consumer Discretionary % 2.7% 7.3% 4.4% 8.4% 8.0% 40.3% Energy % 2.2% 24.1% 23.7% -23.6% -10.0% 20.7% Consumer Staples % 1.5% 1.1% 1.8% 3.8% 12.9% 21.4% Telecom % 3.5% 12.8% 14.1% -1.7% -1.9% 5.9% Materials % 3.1% 17.8% 16.5% -10.4% 4.7% 21.9% Utilities % 1.4% 8.8% 11.5% -8.4% 24.3% 7.1% Source: Bloomberg. Returns based on simply price appreciation unless otherwise noted. Equity indices based in local currency unless otherwise noted. MSCI indices based in USD. Equity indices in Canadian dollars are converted using Bloomberg exchange rates. All values are as at close of previous trading day.

8 8 Global Insight Daily Friday, December 9, 2016 Market snapshot Number crunching Commodities (USD$) Index Level Change Change (%) MTD (%) YTD (%) 52-Week (%) Crude Oil (WTI per barrel) $ % 2.8% 15.0% 11.0% -30.5% -45.9% 1.9% Crude Oil (Brent per barrel) $ % 4.0% 18.5% 10.4% -35.0% -48.3% 3.0% Natural Gas (per million btu) $ % 11.0% 29.6% 32.9% -19.1% -31.7% 8.4% Crack Spread $ % -1.0% -2.0% 1.3% 4.9% -39.5% -20.6% Gold (per ounce) $1, % -0.2% 10.3% 8.9% -10.4% -1.7% -27.3% Silver (per ounce) $ % 2.9% 22.8% 20.1% -11.7% -19.3% -35.5% Platinum (per ounce) $ % 2.9% 5.2% 10.8% -26.1% -11.8% -10.3% Palladium (per ounce) $ % -4.2% 31.1% 34.5% -29.4% 11.3% 3.2% Copper (per pound) $ % -0.6% 22.8% 26.8% -26.1% -13.7% -6.3% Zinc (per pound) $ % 1.2% 70.8% 80.1% -26.5% 5.6% 1.3% Nickel (per pound) $ % 1.5% 29.4% 30.2% -41.8% 9.0% -17.9% Currencies (in CAD$) Index Level Change Change (%) MTD (%) YTD (%) 52-Week (%) U.S. Dollar % -1.9% -4.7% -2.9% 19.1% 9.4% 8.3% Euro % -1.6% -6.9% -5.4% 6.9% -3.7% 12.3% British Pound % -1.2% -18.6% -18.6% 12.7% 2.9% 9.6% Japanese Yen (in JPY ) % 1.5% -0.5% -4.5% -15.7% 4.0% 10.7% Currencies (in USD$) Index Level Change Change (%) MTD (%) YTD (%) 52-Week (%) Canadian Dollar % 1.9% 4.9% 3.0% -16.0% -8.6% -7.7% Euro % 0.3% -2.3% -2.5% -10.2% -12.0% 3.6% British Pound % 0.7% -14.6% -16.1% -5.4% -5.9% 1.2% Japanese Yen (in JPY ) % -0.4% -5.2% -7.3% 0.4% 13.8% 19.9% Source: Bloomberg. Returns based on simply price appreciation unless otherwise noted. Equity indices based in local currency unless otherwise noted. MSCI indices based in USD. Equity indices in Canadian dollars are converted using Bloomberg exchange rates. All values are as at close of previous trading day.

9 09- Dec Nov Dec Dec Nov Dec-15 9 Global Insight Daily Friday, December 9, 2016 DEX Univ Overall Bond TR Key Rates Next Mtg Overnight Rate CAN 0.50% 2017/01/ % 1.00% -4.00% Month Quarter 6 Month YTD Year Bank Rate CAN 0.75% Prime Rate CAN 2.70% Fed Funds US 0.50% 2016/12/14 Discount US 1.00% Prime Rate US 3.50% DEX Univ Bond Indices (As of Nov. 30, 2016) Month Quarter 6 Month YTD Year International Yields O/N 3mo 10-Yr Next Mtg FTSE TMX Canada Universe Bond TR -2.07% -2.71% -0.06% 2.17% 3.33% United Kingdom 0.25% 0.22% 1.41% 2016/12/15 FTSE TMX Canada ST Universe Bond TR -0.49% -0.20% -0.42% 1.06% 1.54% Eurozone 0.00% -0.74% 0.35% 2017/01/19 FTSE TMX Canada MT Universe Bond TR -2.11% -2.41% -0.33% 1.95% 3.18% Australia 1.50% 1.59% 2.82% 2017/02/06 FTSE TMX Canada LT Universe Bond TR -4.16% -6.24% -0.57% 3.77% 5.84% Japan 0.10% -0.35% 0.06% #N/A N/A 4.00 US Treasury 2.50 Government of Canada Dec Nov Dec Nov Dec Dec m 6m 1y 2y 5y 10y 30y m 6m 1y 2y 5y 10y 30y US Treasury Yields 09-Dec Nov Dec Dec-14 DoD Change Government of Canada Yields 09-Dec Nov Dec Dec-14 DoD Change TSY 1 11/30/ yr 1.11% 0.89% 1.05% 0.67% CAN /01/ yr 0.72% 0.59% 0.48% 1.01% TSY /30/ yr 1.84% 1.47% 1.76% 1.65% CAN /01/ yr 1.05% 0.82% 0.73% 1.33% TSY 2 11/15/ yr 2.42% 2.06% 2.27% 2.17% CAN /01/ yr 1.68% 1.37% 1.39% 1.79% TSY /15/ yr 3.12% 2.85% 3.02% 2.75% CAN /01/ yr 2.30% 2.02% 2.15% 2.33% Money Market* GIC's 1-yr 2-yr 3-yr 4-yr 5-yr 1 mth 2mth 3mth 6mth 1 yr High 1.51% 1.70% 1.76% 1.86% 1.97% CDOR 0.88% 0.89% 0.90% 1.06% 1.17% Average 1.29% 1.41% 1.52% 1.64% 1.78% ICE LIBOR US 0.65% 0.76% 0.95% 1.29% 1.65% CAD $1,000,000 1 mth 2mth 3mth 6mth 1 yr CAD $100,000 1 mth 2mth 3mth 6mth 1 yr T-Bills T-Bills 0.41% 0.42% 0.46% 0.52% 0.59% T-Bills T-Bills 0.23% 0.24% 0.28% 0.34% 0.41% BA's BAs 0.76% 0.77% 0.78% 0.89% 0.97% BA's BAs 0.52% 0.53% 0.54% CP CP 0.81% 0.82% 0.83% 0.94% 1.02% CP CP 0.57% 0.58% 0.59% US $1,000,000 1 mth 2mth 3mth 6mth US $100,000 1 mth 2mth 3mth 6mth T-Bills 0.37% 0.00% 0.50% 0.62% T-Bills T-Bills 0.19% % 0.44% CTBUS 0.24% 0.55% 0.71% 0.82% BAs CTB US 0.06% 0.37% 0.53% 0.64% GECC 0.13% 0.13% 0.13% 0.13% CP GECC Economic Indicators** Actual Forecast Forecast Actual Forecast Q316 Q416 Q117 Q217 Q317 Q T-Bills Overnight Rate Yr Yield BA's Real GDP (est) Headline CPI (est) CP Unemployment Rate Q316 Q416 Q117 Q217 Q317 Q T-Bills Fed Funds Yr Yield CTB US Real GDP (est) Headline CPI (est) GECC Unemployment Rate *The prices and yields shown are taken from sources we believe to be reliable. They are provided on an indicative basis for information purposes only. Prices and yields are subject to change with availability and market conditions. RBC Dominion Securities does not warrant its completeness or accuracy. This is not an offer or solicitation for the purchase or sale of any securities or financial instruments. Securities or financial instruments mentioned herein may not be suitable for all investors. ** Source: Bloomgberg Forecast ***ICE LIBOR data over 24-hours stale

10 10 Global Insight Daily Friday, December 9, 2016 Important disclosures RBC Capital Markets Conflicts Disclosures RBC Capital Markets Policy for Managing Conflicts of Interest in Relation to Investment Research is available from us on request. To access our disclosures, clients should refer to or send a request to RBC CM Research Publishing, P.O. Box 50, 200 Bay Street, Royal Bank Plaza, 29 th floor, South Tower, Toronto, Ontario M5J 2W7. We reserve the right to amend or supplement this policy at any time. The author(s) of this report are employed by RBC Dominion Securities Inc., a securities broker-dealer with principal offices located in Toronto, Canada. With respect to the companies that are the subject of this publication, clients may access current disclosures by mailing a request for such information to RBC Dominion Securities, Attention: Manager, Portfolio Advisory Group, 155 Wellington Street West, 17 th Floor, Toronto, ON M5V 3K7. The information contained in this report has been compiled by RBC Dominion Securities Inc. ("RBC DS") from sources believed by it to be reliable, but no representations or warranty, express or implied, are made by RBC DS or any other person as to its accuracy, completeness or correctness. All opinions and estimates contained in this report constitute RBC DS s judgment as of the date of this report, are subject to change without notice and are provided in good faith but without legal responsibility. This report is not an offer to sell or a solicitation of an offer to buy any securities. Additionally, this report is not, and under no circumstances should be construed as, a solicitation to act as securities broker or dealer in any jurisdiction by any person or company that is not legally permitted to carry on the business of a securities broker or dealer in that jurisdiction. This material is prepared for general circulation to Investment Advisors and does not have regard to the particular circumstances or needs of any specific person who may read it. RBC DS and its affiliates may have an investment banking or other relationship with some or all of the issuers mentioned herein and may trade in any of the securities mentioned herein either for their own account or the accounts of their customers. RBC DS and its affiliates may also issue options on securities mentioned herein and may trade in options issued by others. Accordingly, RBC DS or its affiliates may at any time have a long or short position in any such security or option thereon. Neither RBC DS nor any of its affiliates, nor any other person, accepts any liability whatsoever for any direct or consequential loss arising from any use of this report or the information contained herein. This report may not be reproduced, distributed or published by any recipient hereof for any purpose. RBC Dominion Securities Inc.* and Royal Bank of Canada are separate corporate entities which are affiliated. *Member Canadian Investor Protection Fund. Registered trademark of Royal Bank of Canada. Used under licence. RBC Dominion Securities is a registered trademark of Royal Bank of Canada. Used under licence. Copyright All rights reserved.