September 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 NAFTA making progress A bilateral trade agreement between the U.S. and Mexico was announced on Monday, putting pressure on Canada to join the preliminary accord. The renegotiated NAFTA terms require that 75% of vehicle production must take place within the countries, up from 62.5%, and a minimum of 40% of the value must be produced by labour earning $16/hour, or else subject to tariffs. The terms also include a 16-year sunset clause, significantly longer than the five years campaigned by President Trump. Talks between Canada and the U.S. continue, with a dispute-resolution mechanism and concessions around Canada s dairy industry reportedly two major hurdles to overcome. Canada s economic growth picks up Canada s economy grew at a 2.9% annualized pace in the second quarter of 2018, well ahead of the prior quarter s 1.4% pace, as energy, aircraft and pharmaceutical products surged. Net exports accounted for over half of the gain and grew at the fastest pace in four years. Consumer spending and housing also exceeded consensus expectations, while business investment lagged (though remains the strongest component of GDP over the past year). Barring further NAFTA roadblocks, an October rate hike from the Bank of Canada appears in play given the current pace of economic expansion. Trans Mountain pipeline approval halted In a surprise outcome, Canada s Federal Court of Appeal nullified approval of the Trans Mountain pipeline and immediately halted construction on the project. The courts claimed the prior approval was impermissibly flawed in failing to account for project-related tanker traffic and not sufficiently consulting Indigenous People. The ruling now forces the National Energy Board to redo its review of the project; a major setback for the Trudeau government, which purchased the $4.5 billion pipeline from Kinder Morgan Inc. earlier this year. Other economic news U.S. GDP was upwardly revised to 4.2% annualized in the second estimate of Q2 growth. The amendment from the originally estimated 4.1% was helped by corporate profits, as tax remittances fell to three-year lows following cuts introduced earlier in the year.

2 Eurozone inflation slowed to 2.0% in August. While the headline price pressures have held close to the central bank s target, core inflation also slowed slightly to 1.0%. Also reported, the eurozone s unemployment rate remained at near-decade lows of 8.2%. What s to come Will manufacturing activity continue to slow? The U.S., eurozone and several others will report manufacturing PMIs for the month of August. The Bank of Canada will also meet during the week, though no policy changes are expected. Source: BMO Economics, Reuters, TD Economics as of August 31,

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, ,586 14,786 S&P/TSX Composite TR Index 55, ,066 49,439 Energy TR 3, ,903 3,197 Materials TR 2, ,944 2,539 Industrials TR 4, ,520 3,643 Consumer Disc. TR 3, ,750 3,071 Consumer Staples TR 5, ,175 5,509 Health Care TR Financials TR 5, ,278 4,561 Information Technology T Telecom Serv ices TR 3, ,157 2,798 Utilities TR 4, ,703 4,145 S&P/TSX 60 TR Index 2, ,693 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 5,038 DAX 30 PR Index 12, ,597 11,727 DJIA PR Index 25, ,617 21,710 DJIA TR Index 56, ,461 46,523 FTSE 100 PR Index 7, ,904 6,867 FTSE 100 TR Index 6, ,831 5,884 FTSE/Xinhua A200 8, ,660 8,452 Hang Seng PR Index 27, ,484 26,871 Hang Seng TR Index 77, ,476 73,827 MSCI EAFE TR Index 7, ,675 7,616 MSCI Emerging Markets TR 2, ,772 2,268 MSCI Europe TR Index 9, ,736 9,501 MSCI Far East Free (ex-japan) TR 1, ,613 1,343 MSCI World TR Index 8, ,058 7,817 MSCI World AC TR Index 1, , NASDAQ Composite PR 8, ,133 6,335 Nikkei 225 PR 22, ,129 19,240 Russell 2000 TR 8, ,632 6,849 Russell 2000 Growth TR 7, ,876 6,016 Russell 2000 Value TR 12, ,066 10,516 S&P 500 PR Index 2, ,917 2,447 S&P 500 TR Index 5, ,783 4,487 Shanghai Comp PR 2, ,587 2,653 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 1.50% 0.75% 0.00% 2.00% 9/5/2018 9/13/2018 9/13/2018 9/26/2018 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, ,321 1,135 1, ,366 1,160 Natural Gas Nickel 12, ,752 10,038 13,738 20,195 15,693 10,174 Platinum ,010 1,523 1,487 1, Soybeans ,424 1,332 1, Silv er Wheat Zinc 2, ,143 1,810 1,876 1,799 3,606 2,298 CPN MATURITY Bond Yields Coupon Maturity Date Canada 2 Year Treasuries /1/ Year Treasuries /1/ Year Treasuries /1/2048 ECB 2 Year Treasuries /11/ 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 August 31,

5 Commentaries contained herein are provided as a general source of information based on information available as of August 31, 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