balanced fund quarterly report

June 30, 2018

Economic Commentary

Equity markets bounced back during the second quarter, reversing the decline that occurred earlier in the year. Financial markets remain quite volatile led by headlines related to global trade tariffs initiated by President Trump and his administration. The tariffs could lead to an all-out trade war with countries retaliating by implementing their own tariffs against the U.S. Such measures could be very damaging to the global economy. In the U.S., the unemployment rate continues to decline to levels not seen in nearly fifty years. Corporate tax cuts and the fiscal stimulus package have added a strong boost to economic growth prospects. Consumer spending has been robust as lower taxes and gradually increasing wages have put consumers in a better financial position. Expectations are for the Federal Reserve to raise rates an additional three times, however this will be dependent on economic data. The Bank of Canada kept the overnight rate unchanged during the second quarter. Prospects for any future rate hikes will be very much data dependent along with the potential impact of any escalation in trade talks. The Canadian dollar has suffered during this process and declined further during the quarter.

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