balanced fund quarterly report

June 30, 2017

Economic Commentary

Volatility surrounding Trumpís presidency continues to fuel uncertainty in global markets. We have started to see a shift in policy from central banks around the world. The accommodative monetary policies that markets have become accustomed to are nearing their end as reflationary forces are surfacing. In particular, in Canada, which has seen strong economic growth and employment, the central bank has altered its interest rate outlook and has moved from the possibility of a potential rate cut to a near-term rate hike. The Canadian dollar has rallied dramatically on this change in sentiment by the Bank of Canada as the market was not contemplating any movement in the bank rate for the balance of the year. The strong performance of the loonie is somewhat surprising given the depressed oil market. Lower prices and elevated inventory levels have had a negative impact on the oil market. The U.S. Federal Reserve hiked rates for the second time this year at their June meeting. However, market expectations for the next hike have been pushed out possibly until early 2018, likely due to lower than expected inflation. In Europe, the central bank has shifted their outlook as reflationary forces have become evident and they hinted at a possible winding down of their quantitative easing program. The Eurozone economy has grown steadily over the past four years and the unemployment rate has declined.

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