The Weekly Bottom Line - May 13, 2011

TD Economics

The Weekly Bottom Line

www.td.com/economics

May 13, 2011

HIGHLIGHTS OF THE WEEK United States • The risk of debt restructuring in Greece is mounting, which in turned spurred Standard & Poor’s to downgrade the country’s credit rating by two notches.

• Meanwhile, the roller coaster ride of crude oil underscored the volatility in oil markets, prompting U.S. stock markets to mirror these movements.

• The effects of surging oil prices were evident on March’s trade data, and April’s retail sales and consumer price data • Going forward, should the recent drops in the price of crude oil be sustained, it could provide some relief to consumer spending and the trade balance.

Canada • Inflation is expected to record another sizeable gain when data are released next Friday. Food and energy have only been mostly responsible for the recent strength in consumer prices. Economic growth in Canada has been surprisingly strong recently and inflationary pressures come with the territory.

• Also, food and gas prices are not the be-all and end-all of the consumer price index. There are many components recording either low or negative inflation which have been, for now, providing some offset.

• Going forward, inflationary pressure will continue to build, though at a modest pace consistent with our forecast for moderate economic growth.

• TD Economics continues to expect the Bank of Canada to resume hiking interest rates at their July meeting, bringing the Overnight Rate to 2.00% by year-end.

THIS WEEK IN THE MARKETS Current*

Week Ago

52-Week 52-Week High Low

Stock Market Indexes S&P 500 1,344 1,340 1,364 1,023 S&P/TSX Comp.

13,402 13,567 14,271 11,093 DAX 7,412 7,492 7,528 5,670 FTSE 100 5,951 5,977 6,091 4,806 Nikkei 9,649 9,859 10,858 8,605 Fixed Income Yields U.S. 10-yr Treasury 3.18 3.15 3.74 2.38 Canada 10-yr Bond 3.20 3.19 3.52 2.69 Germany 10-yr Bund 3.09 3.17 3.49 2.12 UK 10-yr Gilt 3.37 3.38 3.88 2.83 Japan 10-yr Bond 1.13 1.15 1.36 0.85 Foreign Exchange Cross Rates C$ (USD per CAD) 1.04 1.03 1.06 0.93 Euro (USD per EUR) 1.42 1.43 1.48 1.19 Pound (USD per GBP) 1.62 1.64 1.67 1.43 Yen (JPY per USD) 80.6 80.6 92.8 78.9 Commodity Spot Prices** Crude Oil ($US/bbl) 99.5 97.2 113.9 66.0 Natural Gas ($US/MMBtu) 4.09 4.24 5.17 3.18 Copper ($US/met. tonne) 8712.0 8808.0 10179.5 6067.8 Gold ($US/troy oz.)

1503.9 1495.6 1563.7 1161.6 *as of 10:00 am on Friday, **Oil-WTI, Cushing, Nat. Gas-Henry Hub, LA (Thursday close price), Copper-LME Grade A, Gold-London Gold Bullion; Source: Bloomberg

ANNUAL INFLATION RATES Consumer price index, Y/Y % chg.

6

6

5

5

4

4

3

3

2

2

1

1

0

0

-1

U.S.

Canada

-1

-2 -2 2000 2001 2002 2003 2004 2005 2006 2007 2008 2009 2010 2011 Source: Bureau of Labor Statistics, Statistics Canada

GLOBAL OFFICIAL POLICY RATE TARGETS Current Target 0 - 0.25% Federal Reserve (Fed Funds Rate) 1.00% Bank of Canada (Overnight Rate) 1.25% European Central Bank (Refi Rate) 0.50% Bank of England (Repo Rate) 0.00% Bank of Japan (Overnight Rate) Source: Central Banks, Haver Analytics

The Weekly Bottom Line May 13, 2011

2

TD Economics www.td.com/economics

UNITED STATES - THE POWER OF OIL PRICES It was a very busy week with data coming from all fronts.

The week started with Standard & Poor’s cutting Greece’s credit rating by two notches from BB- to B, and Moody’s and Fitch issuing warnings of possible downgrades, as the risk of debt restructuring is mounting. The renewed worries about Europe’s debt issues pushed some momentum back towards the U.S. dollar, which increased by 1% against the Euro as of mid-day Friday. Meanwhile, the roller coaster ride of crude oil and gasoline future prices – persisted.

Oil prices skyrocketed in recent months and that poses a major downside risk to the U.S. economic outlook. As a simple rule of thumb, for every 20% increase in the price of oil, U.S. economic growth is slowed by roughly 0.4 percentage points. The effects of surging oil prices were evident on March’s trade data, and April’s retail sales and consumer price data released this week. In March, the U.S. trade deficit widened by $2.8 billion to $48.2 billion. Led by a 14.1% rise in crude oil imports and a $13 jump in oil prices per barrel, overall imports rose by 4.9% in March. On the flip side, a solid 4.6% improvement in exports – their highest pace of growth in 17 years – was due to an increase in volumes and not prices. Stronger foreign demand for U.S. products coupled with a 1.0% drop in the trade weighted U.S. dollar in March lifted exports, which finally surpassed their pre-recession peak and reached a new record of $172.2 billion. Unfortunately, surging oil prices stole the spotlight.

Given that the price of oil increased by another $7 per barrel in April, petroleum products will continue to weigh on the trade deficit, before the effects taper in May if the recent decline in oil prices is sustained. Oil prices tumbled by 13.1% so far in May. The effects of high energy prices were also apparent in RETAIL SALES M/M % chg.

headline retail sales core retail sales*

1.5 1.0 0.5 0.0 Jan -0.5

Apr

Jul 2010

-1.0 * Excluding auto and gasoline sales Source: Census Bureau

Oct

Jan

2011

Apr

CRUDE OIL - WEST TEXAS INTERMEDIATE US$ per barrel 115 110 105 100 95 90 85 80 Jan-2011

Feb-2011

Mar-2011

Apr-2011

Source: Haver Analytics, TD Economics

the retail sales report. Fueled by a 2.7% increase in gasoline sales, retail sales increased by 0.5% in April. However, core retail spending, which excludes both auto and gasoline sales recorded the smallest monthly gain since December 2010.

The soft reading in core retail sales suggests that the higher pump prices are biting into consumer’s purchasing power.

But, the unwinding of some of the strength in pump prices and sustained improvements in the labor market should keep real consumer spending running at roughly 3% this year.

The final and most anticipated piece of economic news came from the Consumer Price Index (CPI) report, which revealed that oil prices continue to drive a wedge between headline and core inflation. Led by strong gains in energy prices, the annual headline inflation rate rose to 3.1% in April from 2.7% in March. However, there is limited evidence of pass through of higher energy prices to core prices. Annual core inflation inched up to only 1.3% in April from 1.2% in March. But, the trough in inflation is definitely in the rear-view mirror. As the economy and job market continue to expand, the Fed will need to start tightening monetary policy in early 2012, and possible sooner if the Fed becomes worried about inflation expectations becoming unanchored.

All told, higher oil prices pose a risk to the economic outlook. But, the recent drop is a positive development, supporting the notion that the run up was a transitory phenomenon. While gas prices still remain above $4 a gallon in roughly half of the states, they should eventually follow the declines in crude oil. The timing though is contingent on how fast refineries replenish their supplies with cheaper crude oil.

Christos Shiamptanis, Economist 416-982-2556

The Weekly Bottom Line

3

TD Economics

May 13, 2011

www.td.com/economics

CANADA – WHAT TO EXPECT WHEN YOU’RE EXPECTING (INFLATION TO RISE)

CANADIAN CONSUMER PRICE INDEX 40

Y/Y % Change

Y/Y % Change

4

30

3

20

2

10

1

0

0

-10

All-Items CPI (right scale) Gasoline Component (left scale)

-20

-1 -2 -3

-30

-4

-40 2009

Source: Statistics Canada

2010

2011

CANADIAN HEADLINE INFLATION BY COMPONENT

35 30

High Inflation (>3%) Components Total Weight: 40.01%

25

Inflation Rate (%)

With prices at the pump and grocery store checkouts eating away at pocketbooks over the past few months, Canadians don’t need to be told that inflation is on the rise.

And it should come as no surprise that markets are expecting another sizeable gain in the consumer price index when data are released next Friday. However, we felt it important to elucidate a few salient points surrounding the inflation data and what it implies for the average Canadian household.

First, rising price pressures are not entirely being driven by food and energy prices, though those are currently the primary contributors. Fundamentally, economic growth in Canada has been surprisingly strong and inflationary pressures come with the territory. Real GDP data for the fourth quarter of 2010 came in above consensus expectations and the first quarter of 2011 looks set to surprise on the upside as well. Our tracking indicates that the economy will expand at close to a 5% annualized rate in the first quarter of the year, above the Bank of Canada’s expectation of 4.2% growth. TD Economics has maintained that a shift away from personal spending towards business investment and, more notably, exports would characterize the economic recovery in 2011. We are seeing this in spades. Canadian exporters have continued to shrug off a Loonie that has been at above parity for almost four consecutive months now. Instead, stronger-than-expected growth in the U.S. is the dominating factor and international trade data released earlier this week indicated that Canadian exports grew by 3.5% in March. This rounded out the quarter with an impressive $2.4 billion surplus for the first quarter with the U.S. being the primary destination. Indeed, this will be the primary driver of real GDP growth when data are released

20

Gasoline

15 10

2% Target

5 0 -5

Low Inflation (1% or less) Components Total Weight: 42.82%

-10 -15 -1

0

1

2

3

4

5

6

7

8

9

Weight in Consumer Price Index (%) Source: Statistics Canada

two weeks from now. Such robust growth implies that idle capacity is being absorbed quickly, jobs are being created, incomes are growing, and thus prices are being pushed up as firms regain pricing power.

This brings us to our second point. Food and energy are not the be-all and end-all components of the consumer price index – they are simply the most visible to households. Food and energy comprise roughly 20% of the total index. And it is important to realize that while gas prices are high and food prices are expected to rise higher than they currently stand, there are other components that are, for now, providing an offset. To name a few, lower interest rates have led to outright declines in mortgage interest costs, clothing prices have been on a continuous decline since 2000, and auto prices are still quite far from their pre-recession level. In March’s inflation report, the share of components that recorded negative or low inflation (1% or lower) was roughly equivalent to the components that had high inflation (>3%) (see chart).

But what can we expect in the next few months on the price front? TD Economics forecasts underlying inflationary pressures to continue building modestly, in line with our projection for moderate GDP growth in the quarters ahead.

Food inflation will become a bigger driver of overall inflation owing to last year’s rise in global food prices that has yet to fully feed into Canadian food prices. However, it is our belief that gas prices have probably peaked, and that the high Canadian dollar will help to keep underlying inflationary pressures in check. Moderate core inflation will provide the central bank with wiggle room as it begins to gradually tighten the monetary reins this summer.

Francis Fong, Economist 416-982-8066

The Weekly Bottom Line

4

TD Economics

May 13, 2011

www.td.com/economics

U.S.: UPCOMING KEY ECONOMIC RELEASES U.S. Existing Home Sales - April* Release Date: May 19, 2011 March Result: 5.10M TD Forecast: 5.15M Consensus: 5.20M

The housing sector remains on the ropes, weighed down by weak sales and falling prices as the huge glut of unsold homes which continues to temper prices. While the ongoing economic recovery and sustained improvement in labour market activity should provide a favourable backdrop for housing market activity, prospective homebuyers are continuing to sit on the sidelines in hopes of more attractive prices. For now, we expect the pace of sales to stabilise around the 4.75 million to 5.25 million units range, with little intrinsic upside momentum. In April, sales are likely to rise marginally to 5.15 million units, up 1.0% M/M from the 5.1 million units sold in March. Both single-family and multi-family units are expected to rise during the month, with sales of distressed properties continuing to account for one-third of total sales. Cash purchases should also make-up a significant portion of the total sale as invest-

U.S. EXISTING HOME SALES* 8,000

Thousands of units

7,000 6,000 5,000 4,000 3,000 2,000 Feb-10

Apr-10

Jun-10

Aug-10

Oct-10

Dec-10

Feb-11

*Seasonally adjusted at annual rates Source: Census Bureau / Haver Analytics

ment buyers remain active in the market, taking advantage of the bargains to be had. In the coming months, we expect the pace of existing home sales to remain at very depressed levels in the coming months as fear of further price declines tempers demand.

*Forecast by Rates and FX Strategy Group. For further information, contact TDRates&FXResearch@tdsecurities.com.

The Weekly Bottom Line

5

TD Economics

May 13, 2011

www.td.com/economics

CANADA: UPCOMING KEY ECONOMIC RELEASES Canadian Manufacturing Shipments - March* Release Date: May 16, 2011 February Result: -1.5% M/M TD Forecast: 2.0% M/M; Consensus: 1.7% M/M

Following a soft report in February, manufacturing shipments are forecast to close the quarter on a positive note, rebounding by 2.0% M/M in March. This bounce is expected to be primarily driven off of the boost in exports in the recently released international merchandise trade report and strong US demand. While imports from Japan did take a hit in March, the offset is that imports from the US, particularly auto parts, played a major role in countering that decline. In that sense, the story for the manufacturing sector for March and heading forward will be one of satisfying demand with limited supply. Indeed, the latter is expected to play a bigger role in the second quarter of this year where some auto plants in Canada have experienced reduced output and shutdowns in response to the adverse impact on the supply chain. This is especially the case when we take into consideration that inventories of transport equipment have moved lower in recent months and it will only be a matter of time before this begins to feed into manufacturing sales in the second quarter of this year. However, for March, when we adjust for inflation, real shipments is expected to enjoy a modest

CANADIAN MANUFACTURING SHIPMENTS 5.0

M/M % Chg.

Canadian retail sales are expected to have risen by a solid 1.5% in March, which marks the first back-to-back monthly gain since November of last year. This gain is based both on an advance in auto sales and a sharp increase in prices at the pump. Indeed, excluding autos reveals a still-solid 1.2% gain, though when the impact of changing prices—most notably gasoline—is controlled for, real retail sales are forecast to rise by a far more temperate 0.5%.

When combining this forecast with an equally positive expectation for manufacturing shipments and wholesale trade, we are looking at an upbeat industry-level advance in real GDP growth. Keep in mind, however, this release will be trumped by the expenditure-based quarterly release that is currently tracking north of the Bank of Canada’s 4.2%

1.5

Inventory-to-Shipments Ratio (right scale)

4.0 3.0

1.4

2.0 1.0 1.3

0.0 -1.0

Manufacturing Shipments (left scale)

-2.0 Feb-10

Apr-10

Jun-10

Aug-10

1.2 Oct-10

Dec-10

Feb-11

Source: Statistics Canada

uptick on the month of 0.7% M/M. Pulling this altogether indicates that annualized Q1 real GDP is shaping up to be quite strong and could print well above 4.0%, posing a slight upside risk to our own and the Bank of Canada’s forecast for the quarter. Finally, this is also consistent with the notion of diminishing spare capacity in the Canadian economy and with our long-standing call that the Bank will begin to lift the key policy rate higher starting in July.

Canadian Retail Sales - March*

Release Date: May 20, 2011 February Result: total 0.4% M/M; ex-autos 0.7% M/M TD Forecast: total 1.5% M/M ; ex-autos 1.2% M/M Consensus: total 0.8% M/M ; ex-autos 0.7% M/M

Seasonally Adjusted Ratio

CANADIAN RETAIL SALES* 3.0

M/M % Chg.

2.5 2.0 1.5 1.0 0.5 0.0 -0.5 -1.0

Total

-1.5

Ex Motor Vehicles

-2.0 -2.5 Feb-10

Apr-10

Jun-10

Aug-10

Oct-10

Dec-10

Feb-11

*Seasonally Adjusted Source: Statistics Canada / Haver Analytics

forecast outlined in the March Monetary Policy Report.

An important component of this advance will be continued momentum in consumer spending reflected in the forecasted gain in retail sales in March.

*Forecast by Rates and FX Strategy Group. For further information, contact TDRates&FXResearch@tdsecurities.com.

The Weekly Bottom Line

TD Economics

May 13, 2011

Canadian CPI - April*

Release Date: May 20, 2011 March Result: core 0.7% M/M; all-items 1.1% M/M TD Forecast: core 0.2% M/M; all-items 0.6% M/M Consensus: core 0.2% M/M; all-items 0.5% M/M Following the sharp increase in both headline and core prices in March, the CPI report for April will take on an added level of significance. But looking further back in time and recognizing that CPI in February was unusually weak, the two month trend in headline and core prices is running at a far more benign 0.4% and 0.2% respectively. However, there are still forces that will keep inflation elevated in April.

Of note is a further increase in commodity prices, which should help to push the non-seasonally adjusted price index higher by 0.5%. After controlling for seasonal variations, the forecasted increase of 0.3% is not as alarming. When compared to last year, headline CPI inflation is expected to continue to move higher, hitting 3.5% in April.

Shifting to core inflation, we are forecasting a relatively benign 0.2% in both the seasonally adjusted and non-adjusted price index. We would acknowledge an upside risk to this number following news that several large grocery chains raised a wide range of prices by 5% for core food items (recall that only fresh fruits and vegetables are excluded from the Bank of Canada’s core index). Year-ago core inflation will come in at 1.6%.

6

www.td.com/economics

CANADIAN CONSUMER PRICE INDEX (CPI) 3.5

Y/Y % Chg. CPI: All Items

3.0 2.5

Bank of Canada core CPI except eight most volatile items and indirect taxes

2.0 1.5 1.0 0.5 Mar-10

May-10

Jul-10

Sep-10

Nov-10

Jan-11

Mar-11

Source: Statistics Canada / Haver Analytics

Should our forecast for core inflation be realized, core inflation will need to be quite benign over the next two months to match the Bank’s forecast for a quarterly rate of 1.4%. The prospect of an upside surprise to the core inflation outlook combined with our tracking suggesting that economic growth in Q1 will be faster than what the Bank had previously forecast underpins our long-standing forecast that the next hike will occur in July and that the overnight rate will be increased to an even 2.00% by the end of the year.

*Forecast by Rates and FX Strategy Group. For further information, contact TDRates&FXResearch@tdsecurities.com.

The Weekly Bottom Line

TD Economics

May 13, 2011

7

www.td.com/economics

RECENT KEY ECONOMIC INDICATORS: MAY 9-13, 2011 Release Date

Economic Indicators

May 10 May 10 May 10 May 10 May 11 May 11 May 11 May 11 May 12 May 12 May 12 May 12 May 12 May 12 May 12 May 12 May 13 May 13 May 13

NFIB Small Business Optimism Import Price Index IDP/TIPP Economic Optimism Wholesale Inventories MBA Mortgage Applications Trade Balance JOLTs Job Openings Monthly Budget Statement Initial Jobless Claims Continuing Claims Producer Price Index PPI Ex Food & Energy Advance Retail Sales Retail Sales Less Autos Retail Sales Ex Autos & Gas Business Inventories Consumer Price Index CPI Ex Food & Energy U. of Michigan Confidence

May 9 May 9 May 12

Housing Starts Int'l Merchandise Trade New Housing Price Index

May 9 UK Halifax House Prices 3Mths/Year May 9 GE Trade Balance May 9 FR Bank of France Bus. Sentiment May 11 UK Total Trade Balance May 11 JN Adjusted Current Account Total May 11 AU Unemployment Rate May 12 FR CPI - EU Harmonised May 12 EC Euro-Zone Ind. Prod.

May 12 UK NIESR GDP Estimate May 13 EC Euro-Zone GDP Source: Bloomberg, TD Economics

United States

Canada

International

Data for Period

Units

Current

Prior

Apr Apr May Mar 6-May Mar Mar Apr 7-May 30-Apr Apr Apr Apr Apr Apr Mar Apr Apr May

Index M/M % Chg. Index M/M % Chg. W/W % Chg. USD, Blns Thousands USD, Blns Thousands Thousands M/M % Chg. M/M % Chg. M/M % Chg. M/M % Chg. M/M % Chg. M/M % Chg. M/M % Chg. M/M % Chg. Index

91.2 2.2 42.8 1.1 8.2 -48.2 3124 -40.5 434 3756 0.8 0.3 0.5 0.6 0.2 1.0 0.4 0.2 72.4

91.9 2.6 40.8 1.0 4.0 -45.4 3025 -82.7 474 3733 0.7 0.3 0.4 0.8 0.6 0.5 0.5 0.1 69.8

Apr Mar Mar

Thousands CAD, Blns M/M % Chg.

179.0 0.6 0.0

184.7 0.4 0.4

Apr Mar Apr Mar Mar Apr Apr Mar Apr 1Q

Y/Y % Chg. EUR, Blns Index GBP, Mlns Yen, Blns % Y/Y % Chg. Y/Y % Chg. M/M % Chg. Y/Y % Chg.

-3.7 18.9 107 -3005 752.7 4.9 2.2 5.3 0.3 2.5

-2.9 11.9 110 -2655 1209.8 4.9 2.2 7.3 0.7 2.0

R

R R

R R

R R

The Weekly Bottom Line May 13, 2011

8

TD Economics www.td.com/economics

UPCOMING ECONOMIC RELEASES AND EVENTS: MAY 16-20, 2011 Release Date

Time*

May 15 16-20 16-20 May 16 May 16 May 16 May 16 May 16 May 17 May 17 May 17 May 17 May 18 May 18 May 18 May 19 May 19 May 19 May 19 May 19 May 19 May 19 May 19 May 19 May 20

15:45 MAY MAY 08:30 09:00 09:00 09:00 10:00 08:30 08:30 09:15 09:15 07:00 14:00 19:00 00:00 08:30 08:30 09:45 09:45 10:00 10:00 10:00 13:40 TBA

Fed's Lockhart Speaks on U.S. Economic Outlook in Atlanta Mortgage Delinquencies MBA Mortgage Foreclosures Empire Manufacturing Total Net TIC Flows Net Long-term TIC Flows Bernanke Speaks on Intangible Assets in Washington NAHB Housing Market Index Housing Starts Building Permits Industrial Production Capacity Utilization MBA Mortgage Applications Minutes of FOMC Meeting Fed's Bullard Speaks in New York Fed's Dudley to Speak in Middletown, New York Initial Jobless Claims Continuing Claims Bloomberg Economic Expectations Bloomberg Consumer Comfort Existing Home Sales Leading Indicators Philadelphia Fed. Fed's Evans Speaks at Forum in Chicago Fed's Dudley to Speak in Fishkill, New York

May 16 May 16 May 17 May 18 May 18 May 19 May 19 May 20 May 20 May 20 May 20 May 20

8:30 13:00 8:30 8:30 8:30 10:45 16:15 7:00 7:00 7:00 8:30 8:30

Manufacturing Sales BoC's Carney speaks on "Canada in a Multi-Polar World" Int'l Securities Transactions Leading Indicators Wholesale Sales BoC's Carney participates in a panel discussion in Washington Boc Dep. Gov. Lane speaks to the Pension & Benefits Institute Consumer Price Index Bank Canada CPI Core Bank Canada CPI Core Retail Sales Retail Sales Less Autos

Economic Indicator/Event

Consensus Last Period Forecast

Data for Period

Units

1Q 1Q May Mar Mar

Q/Q % Chg. Q/Q % Chg. Index USD, Blns USD, Blns

- - 20.0 - - -

8.22 4.63 21.7 97.7 26.9

May Apr Apr Apr Apr 13-May

Index M/M % Chg. M/M % Chg. M/M % Chg. % W/W % Chg.

17.0 3.8 0.9 0.4 77.6 - -

16.0 7.2 11.2 0.8 77.4 8.2

14-May 7-May May 15-May Apr Apr May

Thous.

Thous.

Index Index Mlns M/M % Chg. Index

420 - - - 5.20 0.1 20.0

434 3756 -16.0 -46.9 5.10 0.4 18.5

Mar

M/M % Chg.

1.7

-1.5

Mar Apr Mar

CAD, Blns M/M % Chg. M/M % Chg.

- 0.5 1.5

2.50 0.8 -0.6

Apr Apr Apr Mar Mar

M/M % Chg. M/M % Chg. Y/Y % Chg. M/M % Chg. M/M % Chg.

0.5 0.2 1.6 0.8 0.7

1.1 0.7 1.7 0.4 0.7

Apr Apr Apr May May Apr 1Q P May Apr 20-May

Index Y/Y % Chg. Y/Y % Chg. M/M % Chg. M/M % Chg. Thous.

36.7 -4.1 87.5 -0.0 -2.0 -2.5 --

38.6 1.3 4.0 87.1 1.2 0.7 -1.3 0.0 1.3 0.1

United States

Canada

International

May 16 1:00 JN Consumer Confidence May 16 5:00 EC Euro-Zone CPI - Core May 17 4:30 UK CPI May 17 5:00 GE Zew Survey (Current Situation) May 17 20:30 AU Westpac Consumer Confidence s.a.

May 18 4:30 UK Jobless Claims Change May 18 19:50 JN GDP Annualized May 18 21:00 NZ ANZ Consumer Confidence Index May 19 4:30 UK Retail Sales w/Auto Fuel May 20 JN BOJ Target Rate * Eastern Standard Time; Source: Bloomberg, TD Economics

M/M % Chg. Y/Y % Chg. %

The Weekly Bottom Line May 13, 2011

TD Economics

9

www.td.com/economics

CONTACTS AT TD ECONOMICS Craig Alexander Senior Vice President and Chief Economist mailto:craig.alexander@td.com

CANADIAN ECONOMIC ANALYSIS

U.S. & INTERNATIONAL ECONOMIC ANALYSIS

Derek Burleton, Vice President and Deputy Chief Economist mailto:derek.burleton@td.com

Pascal Gauthier Senior Economist mailto:pascal.gauthier@td.com

Beata Caranci, Associate Vice President and Deputy Chief Economist mailto:beata.caranci@td.com

James Marple Senior Economist mailto:james.marple@td.com

Diana Petramala Economist, Macro mailto:diana.petramala@td.com

Martin Schwerdtfeger Economist, International mailto:martin.schwerdtfeger@td.com

Francis Fong Economist, Special Studies mailto:francis.fong@td.com

Christos Shiamptanis Economist mailto:christos.shiamptanis@td.com

Dina Cover Economist, Industry mailto:dina.cover@td.com

Alistair Bentley Economist mailto:alistair.bentley@td.com

Shahrzad Mobasher Fard Economist, Industry mailto:shahrzad.fard@td.com

Chris Jones Economic Analyst mailto:christopher.w.jones@td.com

Sonya Gulati Economist, Regional and Government Finances mailto:sonya.gulati@td.com

TO REACH US

Leslie Preston Economic Analyst mailto:leslie.preston@td.com

Mailing Address 55 King Street West 21st Floor, TD Tower Toronto, Ontario M5K 1A2 Fax: (416) 944-5536 mailto:td.economics@td.com

This report is provided by TD Economics for customers of TD Bank Group. It is for information purposes only and may not be appropriate for other purposes. The report does not provide material information about the business and affairs of TD Bank Group and the members of TD Economics are not spokespersons for TD Bank Group with respect to its business and affairs. The information contained in this report has been drawn from sources believed to be reliable, but is not guaranteed to be accurate or complete. The report contains economic analysis and views, including about future economic and financial markets performance. These are based on certain assumptions and other factors, and are subject to inherent risks and uncertainties. The actual outcome may be materially different. The Toronto-Dominion Bank and its affiliates and related entities that comprise TD Bank Group are not liable for any errors or omissions in the information, analysis or views contained in this report, or for any loss or damage suffered.