Below, you will find our monthly market update and relative information that pertains to the current state of the economy.

Market Update

• All market indices have closed higher than the beginning of the month.
  • • The S&P 500 finished at 5,762.48 pts (+2.02%)
    • The DOW finished at 42,330.15 pts (+1.85%)
    • The NASDAQ finished at 18,189.17 pts (+2.68%)
    • The TSX finished at 24,000.37 pts (+2.80%)

Canada

Monetary Policy

• On September 4^th, The Bank of Canada (“BoC”) decided to reduce the overnight lending rate by 25bps.
  • Currently, the overnight rate is 4.25%, the Bank Rate is at 4.50%, and the deposit rate is at 4.25%.
  • In the BoC’s most recent outlook, they identify inflation continuing to moderate in 2024 before reaching its 2% target in 2025.
  • The next scheduled date for announcing the overnight rate target is October 23^rd, 2024.

Economic Data

• Canada’s inflation rate was 2.0% in August, which was below the 2.1% rate economists had expected, and was the lowest since February 2021.
• Gross domestic product in Canada expanded by 0.2% in July, which topped economists’ expectations of 0.1%.
• A rise in retail trade and in the financials sector contributed to Canada’s growth in July. Conversely, the transportation and warehousing industry detracted from growth.

U.S.

Monetary Policy

• The Fed announced that it was lowering its federal rate in its July meeting by 50bps.
  • The target range for the federal funds rate is still 4.75-5.00%.

• The Committee has gained greater confidence that inflation is moving sustainably toward 2 percent, and judges that the risks to achieving its employment and inflation goals are roughly in balance.
• The biggest driver of the rate cut seemed to be the loss of momentum in the U.S. labour market.
  • Fed officials expressed concern about the labour market and reiterated the central bank’s stance on maximizing employment.
• The next meeting will take place on November 6^th-7^th.

Economic Data

• The U.S. economy added 142,000 jobs in August, which was below both estimates and the 165,000 job additions in the previous month.
• The U.S. inflation rate dropped to 2.5% in August from 2.9% in the previous month. August’s reading matched expectations and was the lowest since February 2021.
• The U.S. unemployment rate moved lower to 4.2% in August from 4.3% in July.

Global

• The Bank of England (“BoE”) kept its policy interest rate steady at 5.00% at its September meeting.
  • This followed a 25-bps rate cut at its previous meeting.
• The European Central Bank (“ECB”) lowered its policy interest rate by 60 bps to 3.65%.
• The Bank of Japan (“BoJ”) held its policy interest rate steady at its September meeting after two increases earlier in the year.
  • Japan’s economy has faced elevated inflationary pressures, which prompted the BoJ’s rate hikes.

Notes From our Firm

• As we begin to take some of our clients through the process of the Canada Pension Plan benefit, there are some misconceptions surrounding the CPP benefit and how they calculate your premiums.
  • What many people forget is that CPP automatically “drops-out” your lowest 8 years from the calculation, what they DO NOT automatically “drop-out” is the child rearing years where the primary caregiver has been primarily taking care of children under the age of 7.
  • By manually applying for these years to be removed from your calculation, this may increase your CPP benefits – Here is a great article explaining in more detail.

As always if you have any questions, please feel free to reach out to us. Or, if you know someone who would like an opinion on their investments or insurance, please connect us! There is no better compliment than a referral from one of our current clients.

The Team, C.R. Smith Financial

Community, Respect, Service & Financial Integrity