Highlights

•   Fears of contagion in Europe’s government bond market grew this weak as S&P downgraded the sovereign debt of Greece, Portugal and Spain

•   The USD rallied as investors sought refuge in U.S. Treasuries, meanwhile stocks fluctuated as strong earnings counteracted investor risk aversion

•   US Q1 GDP recorded solid 3.2% annualized growth, further supporting our view that the economic recovery is both sustainable and gaining traction

•   Personal consumption expenditures and private fixed investment showed signs of strength, while net export growth disappointed

•   The Fed’s policy meeting this week was rather bland, as the FOMC reiterated its commitment to keep rates low for an ‘extended period’

•   Canadian economic activity advanced 0.3% M/M in February, an eased pace from January but still putting real GDP on track for a 5.3% annualized gain in Q1/2010

•   The goods-producing sector accounted for the bulk of February’s GDP advance, led by a 1.2% M/M increase in manufacturing activity

•   Pace of appreciation in Canadian Teranet-NB home price index (a quality-adjusted measure preferred over the average re-sale price) accelerated to 9.9% Y/Y in February, from 7.5% Y/Y in January

•   However, the monthly increases in the home price index are slowing, with a 0.2% M/M rise in February – the slowest pace of gain since the April 2009 turn in the index