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Economic and Financial Market Outlook: Low for Longer…For Even Longer

This economic and financial market outlook highlights the challenges and opportunities in various regions such as China, Eurozone, United States, and Canada. It discusses the impact of factors like Brexit, political uncertainty, structural issues, and oil prices on the global economy. The report also analyzes the implications for currency and financial markets.

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Economic and Financial Market Outlook: Low for Longer…For Even Longer

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  1. Economic and Financial Market Outlook: Low for Longer…For Even Longer Mazen Issa Senior FX Strategist August 2016

  2. China: Growth Expectations Marked Lower…

  3. …But More than Meets the Eye When it Comes to China

  4. Growth Spectrum Not Off to a Good Start… WEAKER 2016 STRONGER 2016 China: Managing slower growth with unknown structural potholes

  5. Growth Spectrum Not Off to a Good Start… WEAKER 2016 STRONGER 2016 China: Managing slower growth with unknown structural potholes Emerging Asia: Caught in China's grip

  6. The Sun is Starting to Rise on the Eurozone…

  7. …But Political Uncertainty Is Also on the Rise Since Brexit

  8. The Problem With Brexit

  9. Europe No Longer a Headwind, but Will Only Provide Minimal Support Eurozone: Structural issues to restrain rebound UK: Recession bound WEAKER 2016 STRONGER 2016 China: Managing slower growth with unknown structural potholes Emerging Asia: Caught in China's grip

  10. Are Some US Economic Headwinds Turning a Corner?

  11. All the Familiar Fundamental Headwinds Continue to Heal

  12. US Recovery Expected to Remain on Track Despite Global Turmoil Eurozone: Structural issues to restrain rebound WEAKER 2016 STRONGER 2016 United States: Fundamental healing with a bit more turbulence China: Managing slower growth with unknown structural potholes Emerging Asia: Caught in China's grip

  13. Saudi Arabia Has Reshaped the Supply Landscape of Oil

  14. Demand Remains Deficient & Supply is Abundant

  15. Primary Hit to Canada is Through Business Investment

  16. Currency is Serving as an Important Shock Absorber to the Economy

  17. Non-Energy Exports Helping to Provide An Offset

  18. However Link to the United States is Not As Close as Before

  19. Even More Pressure on Domestic Demand to Carry the Load

  20. Incomplete Offset to Energy Weakness Will Weigh on Canada Eurozone: Structural issues to restrain rebound Canada: Competing growth impulses WEAKER 2016 STRONGER 2016 United States: Fundamental healing with a bit more turbulence China: Managing slower growth with unknown structural potholes Emerging Asia: Caught in China's grip

  21. Taper Tantrum Experience Reinforced the Theme of Gradualism

  22. Even with 50bps of hikes expected from Federal Reserve in 2017, government bond yields are going to remain low by historical standards. Bank of Canada could cut if growth dynamics do not improve. Demand and supply mismatch in the oil market implies renewed downside price pressure with a recovery anticipated in 2016H2. WTI to reach around $60/bbl by the end of 2016. Financial Market Implications for the Outlook

  23. The Easy Part of the USD Rally Has Passed

  24. The USD Looking More Like an Ageing Rather than a Raging Bull

  25. ECB Policy Crowded Out Investors…

  26. …and Has Encouraged a Reach for Yield in Regions Like CAD

  27. Oil and Rates Still Important Drivers for CAD But May Become More Elusive

  28. The recovery from a balance sheet recession always moves slower and takes longer than you expect Confidence is key to avoid lurking vulnerabilities in a slow-growth environment: Counterintuitive Federal Reserve response function All other central banks biased to do more and deal with the consequences later Untested economic theory will lead to more uncertainty and more market volatility A Road Map to 2016

  29. Mazen Issa Senior FX Strategist 212– 827 – 7182 mazen.issa@tdsecurities.com

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