February 20, A recap of last week s top economic news and what s to come

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1 A recap of last week s top economic news and what s to come U.S. inflation moves higher U.S. consumer prices rose a sizable 0.5% in January, the largest monthly increase in five years. Inflation effects were broad-based with higher apparel prices leading the gains along with energy, food and medical care products. On an annualized basis, headline inflation held above 2.0% for the fifth straight month with 2.1% growth in January. Core inflation surged 0.3%, the largest monthly increase since 2005, reaching a ten-month high of 1.8% annualized. Core prices have moved sharply higher of late with the three-month annualized increase reaching 2.9%, the highest level since Canadian home sales slump Canadian existing home sales fell 14.5% in January, sharply reversing five straight months of sales growth to end A reversion was expected, however, as buyers pulled forward demand to end the year ahead of January s new OSFI qualification rules. 21 of 26 major Canadian markets reported negative growth in January, 15 of which suffered double-digit declines led by Ottawa, Hamilton and the Greater Toronto Area. New listings were also down a sizable 21.6%, most significantly in Ontario and British Columbia. Average home prices fell 2.4% in the month as Toronto and Vancouver, two of Canada s hottest and most expensive markets, saw their share of national sales decrease. Despite growing at the softest pace since December 2015, Canadian housing growth remains healthy with price increases of 7.7% year over year. U.S. housing remains robust U.S. housing starts grew 9.7% in January to the highest level in over a year as both single- and multi-unit segments advanced. All regions reported positive growth except for the Midwest, which was impacted by winter weather conditions during the month. Building permits also beat expectations with a 7.4% jump in January to reach a post-recession high. Permit volumes continue to trend higher than housing starts, which combined with tight supply, should lead to robust construction activity in the months ahead. Other economic news U.S. retail sales unexpectedly fell 0.3% in January, reporting the first pullback in five months. Additionally, December s solid 0.4% gain was downwardly revised to a flat reading. Vehicle sales, building and garden

2 equipment, and health goods declined in the month. Positively, year-over-year retail sales remain solid with 4.9% growth and tax relief should boost wages in February, leading to further growth. The eurozone economy expanded 0.6% in the final quarter of 2017, confirming initial estimates of 2.5% growth for the year. It was the strongest pace of expansion since 2007 for the region. Japan also reported a 0.5% annualized rate of growth in the fourth quarter, marking the eight straight quarter of expansion. What s to come Global inflation data The eurozone, Canada and Japan will report respective inflation levels during the week. Economists will be closely watching to see if recent U.S. price pressures are developing globally as well. The U.S., eurozone and Japan also report manufacturing activity during the week. Source: BMO Economics, TD Economics, Ned Davis Research, as of February 16,

3 Return (CAD, %) Annualized Return (CAD, %) CANADIAN EQUITY INDEXES Close Week YTD 1 YR 3YR 5 YR 10 YR 52 wk high 52 wk low S&P/TSX Composite PR Index 15, ,421 14,786 S&P/TSX Composite TR Index 51, ,682 49,253 Energy TR 3, ,811 3,197 Materials TR 2, ,947 2,491 Industrials TR 3, ,032 3,423 Consumer Disc. TR 3, ,484 2,887 Consumer Staples TR 5, ,158 5,502 Health Care TR Financials TR 4, ,235 4,455 Information Technology T Telecom Serv ices TR 2, ,157 2,719 Utilities TR 4, ,703 4,145 S&P/TSX 60 TR Index 2, ,625 2,346 MSCI Canadian Small Cap PR Index Return (CAD, %) Annualized Return (CAD, %) WORLD EQUITY INDEXES Close Week YTD 1 YR 3YR 5 YR 10 YR 52 wk high 52 wk low CAC 40 PR Index 5, ,567 4,806 DAX 30 PR Index 12, ,597 11,722 DJIA PR Index 25, ,617 20,380 DJIA TR Index 54, ,461 43,213 FTSE 100 PR Index 7, ,793 7,073 FTSE 100 TR Index 6, ,609 5,864 FTSE/Xinhua A200 10, ,660 8,533 Hang Seng PR Index 31, ,484 23,439 Hang Seng TR Index 83, ,476 61,300 MSCI EAFE TR Index 8, ,675 6,740 MSCI Emerging Markets TR 2, ,772 1,963 MSCI Europe TR Index 10, ,736 8,195 MSCI Far East Free (ex-japan) TR 1, ,613 1,125 MSCI World TR Index 8, ,058 7,232 MSCI World AC TR Index 1, , NASDAQ Composite PR 7, ,506 5,769 Nikkei 225 PR 21, ,129 18,225 Russell 2000 TR 7, ,926 6,550 Russell 2000 Growth TR 6, ,041 5,573 Russell 2000 Value TR 11, ,066 10,294 S&P 500 PR Index 2, ,873 2,322 S&P 500 TR Index 5, ,347 4,487 Shanghai Comp PR 3, ,587 3,017 ECO_RELEASE_DT Interest Rates Current Next Meeting Bank of Canada Ov ernight Lending Rate Bank of England Repo Rate European Central Bank Min bid rate at refi tende Federal Funds Target Rate 1.25% 0.50% 0.00% 1.50% 3/7/2018 3/22/2018 3/8/2018 3/21/2018 3

4 Total Ret (%) Historical Prices 52 wk 52 wk Commodities ($US) Close Week YTD 1 YR 3YR 5 YR 10 YR high low Copper Corn Crude Oil Gold 1, ,239 1,232 1, ,366 1,195 Natural Gas Nickel 13, ,032 14,542 18,314 27,405 13,969 8,700 Platinum 1, ,013 1,207 1,682 2,085 1, Soybeans 1, , ,425 1,374 1, Silv er Wheat , Zinc 3, ,853 2,139 2,147 2,296 3,589 2,419 CPN MATURITY Bond Yields Coupon Maturity Date Canada 2 Year Treasuries /1/ Year Treasuries /1/ Year Treasuries /1/2048 ECB 2 Year Treasuries /13/ Year Treasuries /15/ Year Treasuries /15/2048 Japan 2 Year Treasuries /15/ Year Treasuries /20/ Year Treasuries /20/2047 US 2 Year Treasuries /31/ Year Treasuries /15/ Year Treasuries /15/2048 Current Price Yield to Maturity Total Ret (%) Historical Prices Currencies Close Week YTD 1 YR 3YR 5 YR 10 YR high low CAD / EURO CAD / USD CAD / UK POUND USD / AUSTRALIAN $ USD / BRAZIL REAL USD / EURO USD / MEXICAN PESO USD / UK POUND USD / YEN Source: Bloomberg, as of February 16,

5 Commentaries contained herein are provided as a general source of information based on information available as of February 16, 2018 and should not be considered as personal investment advice or an offer or solicitation to buy and/or sell securities. Every effort has been made to ensure accuracy in these commentaries at the time of publication; however, accuracy cannot be guaranteed. Market conditions may change and the manager accepts no responsibility for individual investment decisions arising from the use of or reliance on the information contained herein. Published Date: 5