Around the World – Week of July 24th Update

Author: Portfolio Specialist Group

July 24, 2017

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

Weekly Market Review


  • Canadian inflation disappointed in June as it slowed to an annualized pace of 1.0%, missing expectations and falling below May’s rate of 1.3%.
  • Electricity and gasoline continued to weigh on prices, down 1.4% and 5.3%, respectively, during the month. Positively, food prices trended upwards to 0.6% in June, marking the first increase after contracting for eight consecutive months.
  • Retail sales continued with strong momentum, recording a 0.6% advance in May, tripling expectations and marking a third straight month of growth, which could support the case for another Bank of Canada rate hike this year, though inflation remains low.
  • Five of 11 sub-sectors reported higher sales, with the advance largely driven by stronger auto sales (2.4%). Excluding autos, retail sales dropped by 0.1%.


  • Existing home sales in Canada suffered the worst monthly decline in seven years, falling 6.7% in June. After peaking in March, sales have contracted three straight months by a combined 14.0%.
  • Declines were widespread, though felt worst in Ontario, where sales in Toronto fell 15.1%. In Vancouver, also affected by restrictions placed on non-resident buyers, sales were down 4.0% in June. Excluding the hot markets in Ontario and British Columbia, existing home sales fell a more modest 3.9% during the month.
  • The sales-to-listings ratio also eased to 52.8%, comfortably in “balanced” conditions, which are considered between 40-60%.


  • U.S. housing starts ended a three-month losing streak with an 8.3% jump in June. It was the largest monthly increase since October and returned back to levels last reached in February.
  • Both single- and multi-family homes advanced, bringing the 12-month average for housing starts to the highest level since April 2008.
  • Also reported, building permits rose 7.4% in June, the largest monthly increase in nearly two years, which bodes well for future starts.


  • The European Central Bank (ECB) initially came across as dovish in its meeting last week as it held interest rates steady. However, at a subsequent news conference, Draghi spoke about rising inflation in the coming months, albeit gradually. Draghi also noted that the central bank would debate bond purchases at its meeting in September. The market perceived these comments as more hawkish, a move away from easier monetary policy, which resulted in a rally in the euro against the U.S. dollar. Still, data released last week showed that inflation continues to trend lower with June’s CPI falling to 1.3% annualized, down from 1.4%. Core CPI, however, rose to 1.1%, up 0.2% during the month.
  • The Chinese economy topped expectations with GDP growth of 1.7% during the second quarter of 2017 or 6.9% year over year on annualized basis. All major sectors expanded from the prior year, including industrial production, which grew at its fastest pace since December 2014. Fixed asset investment for the first half of 2017 rose 8.6%. Also reported, retail sales rose 11.0% on a year over year basis in June, which was above expectations.

What’s to come


  • The U.S. Federal Reserve’s (Fed) meeting on Wednesday will be closely watched for indications of future policy changes. Durable goods orders and an update on housing conditions will also be reported in the U.S. Canada will report May’s GDP results on Friday in an otherwise quiet week. An update on manufacturing PMI data will also be released for the U.S., eurozone and Japan.

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Written by

Portfolio Specialist Group

AGF Investments Inc.

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