Around the World – Week of July 17th Update

Author: Portfolio Specialist Group

July 17, 2017

“A recap of last week’s top economic news and what’s to come”

Weekly Market Review


  • As widely expected, the Bank of Canada (BoC) raised interest rates by 25 basis points to 0.75%, its first increase in almost seven years.
  • The BoC’s accompanying comments were generally upbeat, noting a significant amount of economic slack has been absorbed and that wages and employment are expected to rise.
  • The BoC also upgraded its assessment of the economy as it anticipates growth of 2.8% in 2017, up from 2.6% in its April outlook. Growth is expected to moderate to 2.0% in 2018 and 1.6% in 2019.


  • U.S. inflation remained unchanged in June, bringing the annualized rate down to an eight-month low of 1.6% and well below February’s high of 2.7%.
  • Core CPI rose 0.1% during the month, maintaining the annualized rate at 1.7%.
  • Though still close to the U.S. Federal Reserve’s (Fed) 2% target, the downward trend adds some uncertainty to the Fed’s plans to normalize policy.


  • Canadian housing starts rose 212,700 annualized units in June, recovering most of the losses incurred over the prior two months.
  • Both single-detached and multi-unit starts rose during the month, pushing the six-month average close to a five-year high.
  • Regionally, Ontario and Quebec drove the majority of the increase. British Columbia declined in June, though the province recorded its strongest quarter for housing starts since 1993.


  • U.S. retail sales fell 0.2% in June, missing expectations for a marginal gain. The weakness was broad-based, including a slide in gas station receipts, which fell 1.3% on lower prices. Also reported, U.S. industrial production rose for a fifth straight month, up 0.4% in June. Production was up 1.2% in the second quarter of 2017, the most in three years.
  • Fed Chairwoman Janet Yellen testified to the House Financial Services Committee with a mildly dovish tone, appearing increasingly uncomfortable with low inflation levels. Yellen also commented on the neutral rate being “currently quite low”, though confirmed the Fed’s intentions to begin reducing the balance sheet this year.

What’s to come


  • Canadian inflation will be reported on Friday, as well as retail sales. Both are expected to slow marginally. An update on U.S. housing will also be released, with housing starts and building permits reported during the week. Elsewhere, the European Central Bank and Bank of Japan will both hold policy meetings.

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Written by

Portfolio Specialist Group

AGF Investments Inc.

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