balanced fund quarterly report

December 31, 2017

Economic Commentary

Equity markets finished the year strong while bond yields rose into year-end. Despite the high level of uncertainty and geopolitical risks in the market, volatility remains muted. The Bank of Canada did not change its overnight interest rate at either of its two meetings in the fourth quarter. The bank will take a cautious approach toward future interest rate hikes. There are still uncertainties in the market which may prevent the Bank from aggressively raising rates, including the negative impact of lower oil prices. The Canadian economy exhibited signs of a slowdown following a stellar start to the year. After leading the G7 countries for the first half of the year, Canadian GDP growth rates have subsided during the second half of the year. The U.S. Federal Reserve hiked rates for the third time in 2017 at their December meeting as both growth and employment have continued to show strength. Just before year-end the Republican party passed the long-awaited tax reform bill. This will provide further stimulus to the U.S. economy in 2018. The European Central Bank has maintained an accommodative stance with its monetary policy as inflation and wage growth remain weak in the region.

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