Highlights

United States

•   Events this week had been widely anticipated by financial markets and did not disappoint.  Stock markets posted impressive gains with the S&P 500 and Dow both setting new highs for 2010

•   Congressional midterm elections have caused a shift in America’s political landscape, as Republicans have taken back control of the House of Representatives

•   On Wednesday, the Fed confirmed that it will begin a program of Treasury purchases, with hopes of kick starting growth in the U.S economy

•   The $600bln size of the program was in line with market expectations, but the decision to only purchase a small portion of bonds in the 10 – 30 year space caused 30 year yields to rise

•   Friday’s non-farm payrolls report revealed that the U.S. economy created 150K jobs in October, more than twice consensus expectations


Canada

•   Canadian employment stalled in October, but a drop in the labour force helped bring the unemployment rate down to 7.9%.  On a positive note, full-time employment is still growing at a relatively decent clip.

•   The release of the October CFIB small business confidence index this week underscores our belief that employment growth will remain soft in the near-term.

•   While a second round of quantitative easing in the U.S. has helped improve market sentiment, barring a sharp revival in U.S. demand, it is unlikely to materially improve Canadian economic growth and employment.  A strong Canadian dollar will remain a headwind for Canadian exporters.

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