Mark Vallee, MFin, CFA, CMT Senior Portfolio Manager November 2016 FIXED INCOME OUTLOOK Mark Vallee, MFin, CFA, CMT Senior Portfolio Manager November 2016

FIXED INCOME ENVIRONMENT U.S. Bond Yields Rebound From Historical Low Source: Bloomberg (Jan.1 2006 – Nov.14 2016)

FIXED INCOME ENVIRONMENT Trump’s Pro-growth Policy is Inflationary Major Policy Ramification Tax Cut Reduce Gov’t Revenue Increase Infrastructure Spending Larger Budget Deficit Trade/Establish Prohibitive Tariff Pro-manufacturing & Increase Price Pressure Crack Down on Illegal Immigration Tighter Labour Force / Wage Inflation Pro Energy Coal, Oil & Gas, and Pipelines

FIXED INCOME ENVIRONMENT Shifting Away From Negative Yield Japanese Yield Curve Nov. 14 2016 Jun 30 2016 Nov. 14 2016 German Yield Curve Jun 30 2016 Source: Bloomberg (Jun 30, 2016 – Nov 14, 2016)

FIXED INCOME ENVIRONMENT Canadian Bond Yields Remain Low Source: Bloomberg (Jan.1 2006 – Nov.14 2016)

FIXED INCOME ENVIRONMENT Value in Canadian Credit Sector Source: Bloomberg (Jan.1 2006 – Nov.10 2016)

FIXED INCOME POSITIONING Short Duration with Overweight in Corps Empire Bond Fund FTSE TMX Canada Universe Index Yield 2.49% 1.79% Mod. Duration 7.30Yrs 7.54Yrs Sector Exposure (%) Quality Exposure Source: Empire Life, FTSE TMX Global Debt Capital Markets Bond Index as of Oct.31, 2016

FIXED INCOME SUMMARY Outlook & Positioning U.S. economic fundamentals and Trump policy effects have altered U.S. interest rate outlook Global central banks are shifting away from negative rate policy Canadian yields are likely to continue to stay relatively low Portfolio Positioning Short to neutral duration Overweight credit US dollar exposure

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