tailieunhanh - FINANCIAL MARKETS MONTHLY : Waiting for You Know Who

A financial institution determines the interest rates it charges on its loans by evaluating its cost of funding (the interest it has to pay to borrow money from various sources), its operating expenses and a profit margin. Financial institutions fund their loans from a variety of sources, including consumer and corporate deposits and interbank borrowings. Since interest rates can vary significantly between financial institutions, consumers should compare the interest rates offered by lenders. Calculating the Cost of Borrowing The advertised rate of interest on loans does not usually give a good indication of the true cost of a loan, since fees and different ways of calculating the interest charges. | RBC RBC ECONOMICS I RESEARCH Inside. Overview .page 1 Interest rate outlook .page 5 Economic outlook .page 6 Currency outlook .page 7 Central bank watch .page 8 What s in store for 20132014 .page 9 FINANCIAL MARKETS MONTHLY December 7 2012 Waiting for You Know Who Everyone is waiting for the US political actors to produce a credible and economically viable fiscal policy compromise. Financial markets are trying to keep a stiff upper lip anticipating that policymakers will not allow the US economy to slump back into recession. Economic data suggest that businesses are not as confident about the outcome with investment spending slumping in the third quarter of 2012 and starting the fourth quarter on shaky footing. To be sure the effect of Hurricane Sandy also weighed on activity with a rebound likely in November and December. This pattern was evident in the US auto sales reports with a drop in late October resulting in monthly sales falling below September s rate only to be followed by a 9 surge in November sales propping them up to the fastest pace since before the recession. The nervousness about the US fiscal cliff was also responsible for some of the pullback in Canada with businesses reducing investment and exports dropping sharply in the third quarter. The persistently weak data reported for the Euro area economies and the UK are setting these economies on track to contract in the final quarter of the year thereby adding to the nervous tone. US economy to ease out of 2012 US economic growth was revised higher for the third quarter of 2012 with the initial print of boosted to in the latest update. The biggest contributors to this increase were a larger building of inventories and faster export growth. Conversely the update showed a slower increase in consumer spending and weaker business investment. Given that the upgrade to the Central bank near-term bias Bias three-months out The BoC left the overnight rate at and maintained its tightening bias in