June 4, 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 Canada responds with tariffs on U.S. goods Previously set exemptions on steel and aluminum tariffs against Canada, Mexico and the European Union expired during the week. The U.S. s decision not to extend the exemption drew fire from Prime Minister Trudeau, saying the totally unacceptable tariffs will harm both countries. In response, Canada announced retaliatory tariffs on $16.6 billion of U.S. steel, aluminum and a broad range of other products. Iron, steel and related items will be subject to 25% duties, while the remaining goods impacted, largely food and household products, will receive 10% duties. The Canadian tariffs will go into effect on July 1 if the two countries fail to reach a compromise before the deadline. U.S. labour market charges ahead The U.S. labour market beat expectations with 223,000 jobs added in May, well above the trailing 12-month average of 197,000. Services hiring drove the gain with 171,000 jobs added, while goods sectors added 47,000 positions. A dip in the participation rate, attributed largely to retiring baby boomers, along with May s strong jobs report trimmed the unemployment rate to 3.8%, an 18-year low. Average hourly earnings rose 0.3% in the month to a 2.7% annualized pace of growth. The strong labour conditions are supportive of a Fed rate hike next week, which is now fully priced into market expectations. Canadian economy slows growing pace Canadian GDP rose 1.3% annualized in the first quarter of 2018, the slowest quarterly pace in nearly two years. Business investment grew 10.9%, including an 18.1% climb in machinery and equipment investment. However, consumer spending slowed with growth of only 1.1%, and housing fell 7.2% following new mortgage rules. After reaching GDP growth of 3.8% in mid-2017, the Canadian economy has now slowed to a 2.3% year-overyear pace. Positively, 0.3% GDP growth in March leads to strong momentum heading into the second quarter. 15 of 20 major industries grew in the month with the mining, oil and gas sector leading the advance. Other economic news The Bank of Canada held interest rates unchanged at 1.25%, though alluded to further policy tightening by omitting key references to caution that were previously included in accompanying statements. The central

2 bank noted stronger exports and investments, as well as expectations that housing activity will pick up after a pull-back experienced to start the year. Expectations for a June hike increased following the comments, with a 25bps increase reaching an implied probability of 75%. Eurozone inflation rose sharply to 1.9% annualized in May, from 1.2% previously, to reach the highest level in over a year. A 6.1% annualized increase in energy prices drove much of the headline gain. Core inflation grew to an eight-month high of 1.1%. Also reported, the eurozone unemployment rate returned to neardecade lows of 8.5% in April, with Germany and the Czech Republic leading the strong labour conditions. What s to come Canadian employment update An update on the Canadian labour market is due Friday with job gains and unemployment reported Friday. Canada will also report housing starts and building permits during the week. Elsewhere, the eurozone will report first quarter GDP growth on Tuesday. Source: BMO Economics, TD Economics, Strategas Research, CNBC as of June 1,

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 16, ,421 14,786 S&P/TSX Composite TR Index 54, ,682 49,253 Energy TR 3, ,760 3,197 Materials TR 2, ,944 2,491 Industrials TR 4, ,296 3,592 Consumer Disc. TR 3, ,561 3,048 Consumer Staples TR 5, ,154 5,509 Health Care TR Financials TR 5, ,235 4,514 Information Technology T Telecom Serv ices TR 2, ,157 2,798 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, ,657 4,995 DAX 30 PR Index 12, ,597 11,727 DJIA PR Index 24, ,617 21,113 DJIA TR Index 53, ,461 44,980 FTSE 100 PR Index 7, ,904 6,867 FTSE 100 TR Index 6, ,831 5,884 FTSE/Xinhua A200 9, ,660 8,971 Hang Seng PR Index 30, ,484 25,200 Hang Seng TR Index 83, ,476 67,305 MSCI EAFE TR Index 8, ,675 7,362 MSCI Emerging Markets TR 2, ,772 2,147 MSCI Europe TR Index 9, ,736 9,197 MSCI Far East Free (ex-japan) TR 1, ,613 1,257 MSCI World TR Index 8, ,058 7,611 MSCI World AC TR Index 1, , NASDAQ Composite PR 7, ,637 6,082 Nikkei 225 PR 22, ,129 19,240 Russell 2000 TR 8, ,146 6,641 Russell 2000 Growth TR 7, ,307 5,783 Russell 2000 Value TR 12, ,066 10,294 S&P 500 PR Index 2, ,873 2,406 S&P 500 TR Index 5, ,461 4,487 Shanghai Comp PR 3, ,587 3,041 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% 1.75% 7/11/2018 6/21/2018 6/14/2018 6/13/2018 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, ,264 1,191 1, ,366 1,205 Natural Gas Nickel 15, ,800 12,953 14,766 21,998 15,545 8,723 Platinum ,103 1,459 2,009 1, Soybeans 1, ,510 1,364 1, Silv er Wheat Zinc 3, ,560 2,149 1,901 1,987 3,606 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 /12/ Year Treasuries /15/ Year Treasuries /15/2048 Japan 2 Year Treasuries /1/ Year Treasuries /20/ Year Treasuries /20/2048 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 4

5 Commentaries contained herein are provided as a general source of information based on information available as of June 1, 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