Canada Life | GLC Market Matters (July 2012)

Q2 Highlights

Investor confidence eroded in the second quarter of 2012.
Sovereign debt concerns reignited in Europe while economic data out of the U.S. and China showed a slowing growth trend.
Investors sought safe havens, driving bond yields lower and the U.S. dollar higher.
The Canadian DEX Universe Bond index gained 2.2% (all of that gain taking place in May – the most volatile month of the quarter)
Commodity prices dropped and pulled the resource heavy Canadian S&P/TSX Composite index down 6.4%.
The S&P 500 index outperformed most of its global peers by declining only 3.3% in the quarter and staying firmly in positive territory on a year-to-date basis.
Inflation pressures in both Canada and the U.S. have been well contained, leaving room for supportive monetary and fiscal policy actions:
- In the U.S., the Federal Reserve extended Operation Twist—selling short-term notes to fund purchases of long-dated debt in an effort to lower consumer borrowing costs.
- In Canada, the Bank of Canada maintained the overnight rate at 1.0%.
- European leaders agreed to pump money directly into stricken banks and allow some countries to tap into rescue money by easing stringent budget requirements.
- China positioned itself to take a more accommodative stance to stem slowing growth.