The Weekly Bottom Line

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1 HIGHLIGHTS OF THE WEEK The U.S. economy created 431K jobs in the month of May. However, the details of the report were disappointing as temporary census hiring dominated the headline figure and only 41K jobs came from the private sector. A host of strong data came out earlier in the week, including the ISM manufacturing and non-manufacturing indexes, pending home sales and motor vehicle sales. Financial markets remained agitate this week following Friday s job report and as fears over Europe and North Korea continue to linger in the background. This week s weak job report serves as a stark reminder that in this post recession world, the recovery will not always be even-handed and is full of uncertainty. THIS WEEK IN THE MARKETS Current* Week Ago 52-Week High 52-Week Low Stock Market Indexes S&P S&P/TSX Comp DAX FTSE Nikkei Fixed Income Yields U.S. 1-yr Treasury Canada 1-yr Bond Germany 1-yr Bund UK 1-yr Gilt Japan 1-yr Bond Foreign Exchange Cross Rates C$ (USD per CAD) Euro (USD per EUR) Pound (USD per GBP) Yen (JPY per USD) Commodity Spot Prices** Crude Oil ($US/bbl) Natural Gas ($US/MMBtu) Copper ($US/met. tonne) Gold ($US/troy oz.) *as of 11am Friday, **Oil-WTI, Cushing, Nat. Gas-Henry Hub, LA (Thursday close price), Copper-LME Grade A, Gold-London Gold Bullion; Source: Bloomberg WHERE ARE THE PRIVATE SECTOR JOBS? Index (5+ indicates expansion) Nov.7 May.8 Nov.8 May.9 Nov.9 May.1 Source: BLS, ISM Private Nonfarm Payrolls (right axis) ISM Composite Index (left axis) Chg. In Private Sector jobs, ('s) GLOBAL OFFICIAL POLICY RATE TARGETS Current Target Federal Reserve (Fed Funds Rate) -.25% Bank of Canada (Overnight Rate).5% European Central Bank (Refi Rate) 1.% Bank of England (Repo Rate).5% Bank of Japan (Overnight Rate).1% Source: Central Banks, Haver Analytics 45

2 2 UNITED STATES FURTHER SIGNS OF A RISK FILLED RECOVERY This week, economic and financial conditions were very reflective of the nervous optimism that has surrounded our outlook since the recovery started last year. Data points to strong second quarter growth, but an unimpressive jobs report did not send the signal that markets were hoping for namely that the lagging labor market is fully on board with the recovery. Uncertainty abounds, and financial markets remain agitated after weeks of elevated volatility. In the build up to Friday s jobs report, economists were hopeful that a host of strong data releases during the week would translate into a big boost in private sector job creation. The ISM manufacturing and non-manufacturing indexes both showed strength for the month of May and offered sound evidence that Q2 GDP growth would be stronger than Q1. Pending home sales surprised pleasantly to the upside. But it remains to be seen how sales will hold up once they are no longer supported by the recently expired tax credit. Motor vehicle sales also beat out expectations for the month of May. As the business cycle turns, and motor vehicle sales continue to move off their very low levels, this could be a real catalyst for double digit growth in durable goods spending in the second quarter, and likewise, a significant boost to GDP. Yet despite indications that the economic recovery is on track, private sector job creation in May was disappointing. While the headline non-farms payroll figure showed that 431K new jobs were created, 411K of these were census hires which are temporary and will act as a drag on employment as the census hiring unwinds over the June/ September period. Only 41K new jobs came from the private sector. Given the strength of recent economic data, it is unclear what it will take for private sector job creation to mirror this trend. Ben Bernanke chairman of the Federal Reserve suggested earlier in the week that low levels of credit flowing into small businesses have been dampening progress. Firms with <5 employees represent over 5% of the total job market and are responsible for a disproportionate share of the jobs lost over the recession. Another concern is that some of the recent market volatility has not shown up in the economic data yet. Last week s jump in consumer confidence was promising, but somewhat peculiar given the steep corrections in stock prices and the Index FINANCIAL MARKETS REMAIN AGITATED 6/1/29 8/4/29 1/8/29 12/11/29 2/18/21 4/27/21 Source: Bloomberg, *3-month VIX Index (left axis) Libor-OIS Spreads* (right axis) % pt difference never-ending stream of oil pouring into the Gulf of Mexico. Equity markets were down on the week by 12pm Friday in reaction to the weaker payrolls data. As well, a number of key market indicators have been on edge all week as concerns over Europe and a potential showdown with an unpredictable North Korea have not been forgotten. The VIX index and Libor-OIS spreads both remain at some of their highest levels since last summer. This was to be expected. As the economy started expanding during the second half of last year, investors regularly noted the multitude of uncertainties surrounding the recovery. Conditions over the past month have vindicated this view, and served as a stark reminder that in this post recession world, the recovery will not always be even-handed and is full of uncertainty. This week was reminiscent of how economic conditions are likely to progress over the coming year. Data releases should increasingly show signs that the economy is improving. However, this week s jobs report highlights concerns that have understandably left most economists nervous about the recovery s underlying strength. As well, the bumps and grinds experienced in financial markets during the past month may become commonplace. When we spoke about the risk-filled recovery in our last quarterly economic forecast, we envisaged weeks just like this one Alistair Bentley, Research Analyst

3 3 U.S.: UPCOMING KEY ECONOMIC RELEASES U.S. International Trade - April* Release Date: June 1/1 March Result: -$4.4B TD Forecast: -$42.B Consensus: -$41.B The trade deficit is expected to widen modestly in April owing primarily to an up uptick in the imported energy bill and a modest increase in goods imports. The broader trends in trend suggest its contribution to GDP growth has petered out. In 29 the collapse of domestic demand led to a precipitous drop in imports, a drop magnified by the sharp drop in oil prices. Net export contribution to growth peaked in Q1 29 and has steadily diminished and is on track to exert a modest drag on growth in Q2. The US economy has traction, jobs are rising, and inventory accumulation has already bounced all of which import growth is poised to outperform exports. Export growth will be further trimmed by weaker demand in Euroland (14% of exports) and the rising USD, both of which have already pushed export growth across the Atlantic below its recent trend. It suggests U.S. Retail Sales - May* Release Date: June 11/1 April Result: total.4% M/M; ex-autos.4% M/M TD Forecast: total.1% M/M; ex-autos -.1% M/M Consensus: total.2% M/M; ex-autos.1% M/M Retail sales are expected to inch higher in May owing to an increase in auto related sales, but core sales are forecast to decline by.1%. It will be the first monthly decline in core sales since last October. Gas prices as well as building materials and hardware will be the primary constraint on sales growth the former owing to seasonal factors that anticipated higher unadjusted prices and the latter due to an unsustainable surge over the prior two months. Building materials and hardware are up over 15% over the past two months driven in large part by the rebound in home sales. On balance, the trend growth in sales activity will appear robust with headline and sales ex autos both rising around 7% y/y. Going forward, base effects will make the current pace difficult to sustain even if the current y/y trajectory has further room to run over the short term. The bounce in sales over the prior quarter was driven exclusively by government transfers and a drawdown in savings. Fundamentals are improving U.S. INTERNATIONAL TRADE BALANCE that the deficit, which troughed at a measly $26 billion in mid 29, is set to remain elevated over coming months, though some reduction should be expected in the May data as energy prices fell sharply US$, Billions Mar-9 May-9 Jul-9 Sep-9 Nov-9 Jan-1 Mar-1 Source: Haver Analytics. U.S. RETAIL AND FOOD SERVICES SALES M/M % Chg. Total Excl. Automotive Dealers Apr-9 Jun-9 Aug-9 Oct-9 Dec-9 Feb-1 Apr-1 Source: U.S. Department of Commerce and Haver Analytics. throughout the economy, but household deleveraging, net worth that remains well off the highs, and muted private sector income growth suggest more subdued retail growth rates as we move deeper into the second half of the year. *Forecast by TDSI, Currency and Fixed Income Research. For further information, contact TDSecurities.EconomicswStrategy@ tdsecurities.com.

4 4 Release Date RECENT KEY ECONOMIC INDICATORS: MAY 31-JUNE 4, 21 Economic Indicators Data for Period United States Jun 1 ISM Manufacturing May Index Jun 1 ISM Prices Paid May Index Jun 1 Construction Spending Apr M/M % Chg R Jun 1 Dallas Fed Manf. Activity May M/M % Chg Jun 1 ABC Consumer Confidence 3-May Index Jun 2 MBA Mortgage Applications 28-May M/M % Chg Jun 2 Challenger Job Cuts May Y/Y % Chg Jun 2 Pending Home Sales Apr M/M % Chg R Jun 2 Domestic Vehicle Sales May Millions Jun 2 Total Vehicle Sales May Millions Jun 3 ADP Employment Change May Thousands R Jun 3 Initial Jobless Claims 29-May Thousands R Jun 3 Continuing Claims 22-May Thousands R Jun 3 Factory Orders Apr M/M % Chg R Jun 3 ISM Non-Manf. Composite May Index Jun 3 ICSC Chain Store Sales May Y/Y % Chg Jun 4 Change in Nonfarm Payrolls May Thousands Jun 4 Change in Private Payrolls May Thousands R Jun 4 Change in Manufact. Payrolls May Thousands 29 4 R Jun 4 Unemployment Rate May % Jun 4 Avg Hourly Earning All Emp May M/M % Chg..3.1 R Jun 4 Avg Weekly Hours All Employees May Hours Canada May 31 Quarterly GDP Annualized 1Q Q/Q % Chg R May 31 Gross Domestic Product Mar M/M % Chg..6.2 R May 31 Industrial Product Price Apr M/M % Chg May 31 Raw Materials Price Index Apr M/M % Chg Jun 1 Bank of Canada Rate 1-Jun %.5.25 Jun 4 Unemployment Rate May % Jun 4 Net Change in Employment May Thousands Jun 4 Building Permits Apr M/M % Chg R Jun 4 Ivey Purchasing Managers Index May Index International May 31 AU Retail Sales s.a. Apr M/M % Chg..6.8 R May 31 AU Building Approvals Apr M/M % Chg R Jun 1 AU RBA CASH TARGET 1-Jun % Jun 1 GE Unemployment Change May Thousands R Jun 1 UK PMI Manufacturing May Index Jun 1 EC Euro-Zone Unemployment Rate Apr % Jun 1 AU Gross Domestic Product 1Q Q/Q % Chg R Jun 2 UK Net Consumer Credit Apr GBP, Blns R Jun 2 EC Euro-Zone PPI Apr M/M % Chg..9.6 Jun 2 JN Capital Spending 1Q M/M % Chg Jun 2 AU Trade Balance Apr AUD, Mlns R Jun 3 EC Euro-Zone Retail Sales Apr M/M % Chg R Jun 4 EC Euro-Zone Household Cons 1Q Q/Q % Chg Jun 4 EC Euro-Zone GDP s.a. 1Q Q/Q % Chg..2.2 Source: Bloomberg, Units Current Prior

5 5 Release Date Time* UPCOMING ECONOMIC RELEASES AND EVENTS: JUNE 7-11, 21 Economic Indicator/Event Data for Period Units Consensus Forecast Last Period United States Jun 7 8: NY Fed's Potter Speaks at Conference in Connecticut Jun 7 15: Consumer Credit Apr USD, Blns Jun 7 17: Fed's Yellen Gives Welcome Remarks at Asia Conference Jun 7 19:45 Bernanke Interviewed by Sam Donaldson in Washington Jun 8 7:3 NFIB Small Business Optimism May Index Jun 8 8: Fed's Duke Speaks to Bankers in Florida Jun 8 9:1 Fed's Evans Speaks in Chicago on Economic Outlook Jun 8 1: IBD/TIPP Economic Optimism Jun Index Jun 8 17: ABC Consumer Confidence 6-Jun Index Jun 8 19: Fed's Hoenig Speaks at Agricultural Symposium in Kansas City Jun 9 7: MBA Mortgage Applications 4-Jun M/M % Chg Jun 9 1: Wholesale Inventories Apr M/M % Chg..6.4 Jun 9 12: NY Fed's Sack Speaks to Economists in New York Jun 9 14: Fed Releases Beige Book Economic Report Jun 9 16: Fed's Bernanke Speaks at Richmond Fed Employment Conference Jun 1 8:3 Trade Balance Apr USD, Blns Jun 1 8:3 Initial Jobless Claims 5-Jun Thousands Jun 1 8:3 Continuing Claims 29-May Thousands Jun 1 14: Monthly Budget Statement May USD, Blns Jun 11 8:2 Fed's Plosser Speaks on Economic Outlook in Pennsylvania Jun 11 8:3 Advance Retail Sales May M/M % Chg..2.4 Jun 11 8:3 Retail Sales Less Autos May M/M % Chg..1.4 Jun 11 8:3 Retail Sales Ex Auto and Gas May M/M % Chg..3.4 Jun 11 9:55 U. of Michigan Confidence Jun Index Jun 11 1: Business Inventories Apr M/M % Chg..5.4 Jun 11 12: Fed's Kocherlakota Speaks in Minneapolis on Economy Canada Jun 8 8:15 Housing Starts May Thousands Jun 1 8:3 New Housing Price Index Apr M/M % Chg..3.3 Jun 1 8:3 International Merchandise Trade Apr CAD, Blns.7.3 Jun 11 8:3 Capacity Utilization Rate Q1 M/M % Chg International Jun 6 19:5 JP Official Reserve Assets May Yen, Blns Jun 7 4:3 EU Sentix Investor Confidence Jun Index Jun 7 19:1 UK BRC May Retail Sales Monitor is Released Jun 7 19:5 JP Current Account Total Apr Yen, Blns Jun 7 19:5 JP Adjusted Current Account Total Apr Yen, Blns Jun 7 19:5 JP Trade Balance (BOP Basis) Apr Yen, Blns Jun 7 19:5 JP Bank Lending May Y/Y % Chg Jun 7 19:5 JP Japan Money Stock M3 May Y/Y % Chg Jun 8 12:3 JP Bankruptcies May Y/Y % Chg Jun 8 1: JP Leading Index CI Apr Index Jun 8 1: JP Coincident Index CI Apr Index Jun 8 2: GE Trade Balance Apr Eur, Blns Jun 8 2: GE Imports Apr M/M % Chg Jun 8 2: GE Current Account Apr Eur, Blns Jun 8 2: GE Exports Apr M/M % Chg Jun 8 2: JP Eco Watchers Survey: Outlook May Index Jun 8 2:3 FR Bank of France Business Sentiment May Index Jun 8 2:45 FR Trade Balance Apr Eur, Blns Jun 8 2:45 FR Central Government Balance Apr Eur, Blns Jun 8 19:1 UK Nationwide Consumer Confidence May Index Jun 8 19:5 JP Machine Orders Apr Y/Y % Chg Jun 9 17: NZ RBNZ Official Cash Rate 1-Jun % Jun 1 7: UK BoE Announces Rates 1-Jun %.5.5 Jun 1 7:45 EU ECB Announces Interest Rates 1-Jun % Jun 11 4:3 UK Manufacturing Production Apr Y/Y % Chg * Eastern Standard Time; Sources: Bloomberg,

6 CONTACTS AT TD ECONOMICS 6 Craig Alexander Senior Vice President and Chief Economist mailto:craig.alexander@td.com CANADIAN ECONOMIC ANALYSIS Derek Burleton, Vice President and Deputy Chief Economist mailto:derek.burleton@td.com Pascal Gauthier Senior Economist mailto:pascal.gauthier@td.com Diana Petramala Economist, Macro mailto:diana.petramala@td.com U.S. & INTERNATIONAL ECONOMIC ANALYSIS Beata Caranci, Associate Vice President and Deputy Chief Economist mailto:beata.caranci@td.com James Marple Senior Economist mailto:james.marple@td.com Martin Schwerdtfeger Economist, International mailto: martin.schwerdtfeger@td.com Grant Bishop Economist, Household Finances mailto:grant.bishop@td.com Francis Fong Economist, Special Studies mailto:francis.fong@td.com Dina Cover Economist, Industry mailto:dina.cover@td.com TO REACH US Mailing Address 55 King Street West 21st Floor, TD Tower Toronto, Ontario M5K 1A2 Fax: (416) mailto:td.economics@td.com This report is provided by for customers of TD Bank Financial Group. It is for information purposes only and may not be appropriate for other purposes. The report does not provide material information about the business and affairs of TD Bank Financial Group and the members of are not spokespersons for TD Bank Financial Group with respect to its business and affairs. The information contained in this report has been drawn from sources believed to be reliable, but is not guaranteed to be accurate or complete. The report contains economic analysis and views, including about future economic and financial markets performance. These are based on certain assumptions and other factors, and are subject to inherent risks and uncertainties. The actual outcome may be materially different. The Toronto-Dominion Bank and its affiliates and related entities that comprise TD Bank Financial Group are not liable for any errors or omissions in the information, analysis or views contained in this report, or for any loss or damage suffered.