Take it Easy

By Avery Shenfeld, Chief Economist & Managing Director

April 2010

| 2

Forecast Global Growth of 4% Includes Huge Edge for Emerging Markets

-4

-2

0

2

4

6

8

10

80 82 84 86 88 90 92 94 96 98 00 02 04 06 08 10

Emerging Industrialized

real GDP, y/y % chg

Fcst

| 3

OPEC Spare Capacity Caps Oil Prices in 2010-11

0

1

2

3

4

5

6

7

8

9

Jul-99 Sep-01 Nov-03 Jan-06 Mar-08

mn bbls/day

Feb-10

| 4

Americans Using More“Low Cost” Natural Gas, Less Oil

37

38

39

40

41

05 06 07 08 09 1021

22

23

24

25

Oil (left) Natural Gas (right)

Share of Primary US Energy Demand (%)

Fuel substitution accounts for about a quarter of recent decline in

US oil demand - 500 K bbl/day

| 5

Factory Rebound Will Lift US Natural Gas Demand

Source: US DoE, CIBC Estimates

Commercial15%

Residential23%

Industrial 29%

Power Generation

33%

Vehicle Fuel0.2%

US Natural Gas Demand by Sector (2009)

| 6

Government Net Debt Soars in OECD

30

40

50

60

70

1993

19

95

1997

19

99

2001

20

03

2005

20

07

2009

20

11

Net Debt-to-GDP ratio (OECD), %

Source: OECD, CIBC

| 7

Hitting 3% Deficit Target by 2012 Would Cut G7 Growth by 2% Per Annum

Source: IMF, OECD, CIBC

90

100

110

120

130

2005 2006 2007 2008 2009 2010 2011 2012

Trend GDP

GDP assuming structural deficit cut to 3% by 2012

Index, 2005 = 100

| 8

US Economy: In Like a Lion, Out Like a Lamb

-8

-6

-4

-2

0

2

4

6

07.Q2 07.Q4 08.Q2 08.Q4 09.Q2 09.Q4 10.Q2 10.Q4

q/q % chg in Real GDP, s.a.a.r. Forecast

| 9

Impact of US Stimulus Package and Inventory Changes on US GDP Growth

-3

-2

-1

0

1

2

3

4

5

6

7

09Q:2

09Q:3

09Q:4

10Q:1

10Q:2

10Q:3

10Q:4

11Q:1

11Q:2

11Q:3

11Q:4

fiscal stimulus inventories

Forecastimpact on quarterly growth (%-pts)

| 10

American Consumers Waiting for Income Gainsand Need to Save Again

0

2

4

6

8

10

12

14

80 83 86 89 92 95 98 01 04 07 10

US savings rate (%) fcst

-4

-2

0

2

4

6

8

10

80 83 86 89 92 95 98 01 04 07

Real US personal income y/y chg. (%)

Q409

| 11

US GDI Measure Hints Recession Was Deeper

-10

-8

-6

-4

-2

0

2

4

6

8

10

1990 1996 2002 2008

Real GDP Real GDI

% deviation from potential output

96

97

98

99

100

101

102

103

104

105

06Q1 07Q1 08Q1 09Q1Real GDP Real GDI

Index, (Q1 2006 = 100)

| 12

Inventories Will Weigh on US Housing As Tax Creditsand Fed MBS Support Expire

Composition of Shadow Inventory

0.0

1.0

2.0

3.0

4.0

5.0

6.0

Seriousdelinquency

(netrecovery)

Fore- closure

Bank- owned

million

Housing Inventory

0

1

2

3

4

5

6

7

8

9

10

Mar-03 Mar-05 Mar-07 Mar-09

million

conventional

shadow

| 13

Canada’s Boom Won’t Last

-8

-6

-4

-2

0

2

4

6

07:3 08:1 08:3 09:1 09:3 10:01 10:03 11:015.56.06.5

7.07.58.08.5

9.09.5

Real GDP Growth (left)Unemployment Rate (right)

Forecast %% change s.a.a.r

| 14

Western Provinces Expect Moderate Recovery

Y/Y % Chg 2009E 2010F 2011F 2009E 2010F 2011FProvincial ForecastsBC -2.7 2.2 2.3 -5.0 4.5 4.7Alta -2.5 2.6 2.9 -17.5 7.9 7.6Sask -1.6 2.6 3.3 -12.5 3.8 10.0Man -0.9 2.5 3.0 -0.2 4.0 4.6Ont -3.4 2.7 3.2 -3.5 4.4 5.0Qué -1.4 2.3 2.6 -0.4 4.0 4.5NB -0.5 1.7 NA 1.0 3.9 NANS 0.2 1.9 1.2 -1.0 4.4 2.7PEI1 NA NA NA NA NA NAN&L -8.9 4.0 3.1 -26.7 10.9 8.9Canada ForecastsProvincial2 -2.6 2.5 2.8 -6.2 4.9 5.4Federal -2.5 2.6 3.2 -4.6 4.9 5.4CIBC3 -2.6 3.0 2.5 -4.5 6.4 5.4

1. 2010 Budget has yet to be tab led2. Weighted average of individual provincial forecasts3. CIBC's current national forecastSource: Provincial budgets, CIBC

Real GDP Nominal GDP

| 15

C$ Overvalued Relative to Commodities

50

60

70

80

90

100

110

08Q3 08Q4 09Q1 09Q2 09Q3 09Q4

0.95

1.00

1.05

1.10

1.15

1.20

1.25

Index (08Q3=100) reverse axis

Source: Statistics Canada, CIBC

C$/US$ (R)

BoC Commodity price index (L)

Latest

| 16

Fixed Income Inflows Driving C$ AppreciationC$ to Average Slightly Above Parity Through 2011

-10

-5

0

5

10

15

20

Dec-04 Dec-05 Dec-06 Dec-07 Dec-08 Dec-0975

80

85

90

95

100

105

Net Purchases of C$ Bonds (L) Canadian Dollar (R)

$billions (3mn Total) US¢/C$

| 17

Strong Loonie Sees Canada Cede Manufacturing Share

85

90

95

100

105

110

Dec97 Dec01 Dec05 Dec09

Ratio of Cdn to US factory output, Index=100 in Jan 1997

Source: Statistics Canada, CIBC

| 18

Canada’s Deficits Not as Alarming But Restraint is Coming

-12

-10

-8

-6

-4

-2

0

2

4

86 89 92 95 98 01 04 07 10 13

Canada (Federal + Provincial) US (Federal Only)

Budget Balance, % of GDPFcst

| 19

Provincial Deficit Plans for 2010/11

-10123456789

1011

US Ont NB Alta Qué Sask1 Man BC N&L NS Sask2

Federal Government Provincial Governments

FY2010 Budget Deficit, % of GDP

US=CBO estimateSask1=Summary accounts balanceSask2=GRF balance

| 20

Job Gains Have Leaned on Government Stimulus

Source: Statistics Canada, CIBC

-40-20

020406080

Healt

h

Educ

atio

nCo

nstru

ctio

n

All O

ther

net new jobs (000) July-March

| 21

Canadian House Prices Starting to Overshoot

Source: CREA, IMF, CIBC

Real House Prices

100

150

200

250

300

350

400

88 91 94 97 00 03 06 09

$000s (2009 prices)

Fair value

House Price Overvaluation, as of Nov 2009

0 4 8 12 16

ALTA

BC

MAN/SASK

ONT

QUE

ATL %

| 22

Housing Now a Boost, Later a Drag

Source: CREA, Statistics Canada, Bank of Canada, CIBC

House Prices lead Construction Jobs

1000

1050

1100

1150

1200

1250

1300

06 07 08 09220

240

260

280

300

320

340

360

Construction employment (L)Avg house price (R)

$'000, 3-mo moving avg

$mn

Wealth Effect on Consumption

-2

-1

0

1

2

3

4

5

06 07 08 09 10200

220

240

260

280

300

320

340

360

Housing wealth effect (L)Avg Home Price (R)

$000s

Fcst

$bn

| 23

Unprecedented Debt Accumulation During the Recession

Level

0.8

0.9

1.0

1.1

1.2

1.3

1.4

1.5

92 94 96 98 00 02 04 06 08-2.0

-1.0

0.0

1.0

2.0

3.0

4.0

5.0

6.0

92 94 96 98 00 02 04 06 08

3 qtr moving avg

Y/Y % Change

| 24

Debt Service Burden High Given Low Rates

6.0

6.5

7.0

7.5

8.0

8.5

04 05 06 07 08 09

Effective interestrate on debt:

6.3%

Effective interestrate on debt:

5.2%

| 25

Bank of Canada Has Hiked Prematurely in Past

0

1

2

3

4

5

6

7

8

9

Nov-91 Nov-95 Nov-99 Nov-03 Nov-07

Bank Rate Fed Funds

premature tightening

premature tightening

%

| 26

Hikes Will Still Leave Rates Low by Historical Standards

0

1

2

3

4

5

6

May-05 Mar-06 Jan-07 Nov-07 Sep-08 Jul-09 May-10 Mar-11

%

Cdn overnight rate

10-yr USTForecast

10-yr Cda

Dec 2011

| 27

Impact of Fiscal & Economic Performance on Long Bond Yields – International Experience

45

38

21

0

5

10

15

20

25

30

35

40

45

50

10% rise in Net Debt/GDP 1% rise in real GDP gth 1% rise in Deficit/GDP

bps

Note: based on regression analysis of annual data for G-7,

1961-2008

| 28

Elevated Government Borrowing Puts Pressure on Yields

2008/09A 2009/10A 2010/11F 2011/12FGross Issues (C$billions)Canadas (C$) 75 102 95 85CMB 46 42 40 42Provincial 53 77 78 73Municipal 4 5 5 4Total 178 226 218 204Net Issues (C$billions)Canadas (C$) 41 73 60 28CMB 27 24 18 18Provincial 21 47 50 44Municipal 1 2 2 1Total 90 146 130 91Provincial Share of Government Supply (%)Gross 30 34 36 36Net 23 32 38 48

Source: CIBC

| 29

Stocks Outperform Bonds Around First Rate Hike

Rate Trough TSX Comp. Bonds* TSX Comp. Bond*Jul-58 15.3 2.0 12.5 -0.8Sep-60 -0.5 10.4 23.2 -0.6Jul-63 1.1 1.8 11.8 1.9Mar-73 7.6 7.2 2.4 0.5Feb-78 2.7 1.5 25.4 5.8Jul-80 10.7 3.4 3.2 2.4May-83 34.3 12.4 7.1 4.5Mar-87 27.3 8.3 5.7 -5.5Aug-92 -3.4 10.7 3.0 2.7Feb-94 8.2 3.8 -0.5 -4.3Jun-97 9.6 3.4 4.9 6.1Mar-02 15.7 1.0 -20.6 7.4Aug-04 -3.8 0.9 16.4 2.1

Avg, % (simple) 10.3 3.9 4.1 2.7Avg, %. (ann.) 21.7 8.0 8.3 5.5

6-months before 6-months after

*Scotia Capital Universe Bond Index, 1956-89, BIGAR Broad Composite, 1990-2004, DEX Universe Bond Index, 2004-present.

Note: Geometric Averages, data for individual time periods is unannualized.

| 30

Interest and Exchange Rate Outlook

2010 2011

END OF PERIOD: 7-Apr Jun Sep Dec Mar Jun Sep Dec

CDA Overnight target rate 0.25 0.25 1.00 1.25 1.25 1.75 2.25 2.5098-Day Treasury Bills 0.29 0.60 1.15 1.05 1.15 1.75 2.35 2.552-Year Gov't Bond 1.83 1.90 2.35 2.15 2.40 2.85 3.00 3.2510-Year Gov't Bond 3.68 3.70 3.80 3.75 4.00 4.05 4.00 4.0530-Year Gov't Bond 4.13 4.20 4.40 4.30 4.35 4.40 4.35 4.45

U.S. Federal Funds Rate 0.15 0.15 0.15 0.25 0.75 1.50 2.00 2.2591-Day Treasury Bills 0.20 0.15 0.15 0.20 1.00 1.50 1.80 2.052-Year Gov't Note 1.10 1.10 1.20 1.35 2.20 2.45 2.80 3.0010-Year Gov't Note 3.96 3.96 4.05 4.10 4.45 4.45 4.35 4.5030-Year Gov't Bond 4.85 4.80 4.95 4.85 5.05 5.05 5.00 5.10

Canada - US T-Bill Spread 0.09 0.45 1.00 0.85 0.15 0.25 0.55 0.50Canada - US 10-Year Bond Spread -0.28 -0.26 -0.25 -0.35 -0.45 -0.40 -0.35 -0.45

Canada Yield Curve (30-Year — 2-Year) 2.30 2.30 2.05 2.15 1.95 1.55 1.35 1.20US Yield Curve (30-Year — 2-Year) 3.75 3.70 3.75 3.50 2.85 2.60 2.20 2.10

EXCHANGE RATES CADUSD 1.00 0.99 1.02 1.01 0.96 1.00 1.01 1.02USDCAD 1.00 1.01 0.98 0.99 1.04 1.00 0.99 0.98USDJPY 94 93 90 87 86 86 85 85EURUSD 1.34 1.35 1.41 1.45 1.47 1.48 1.50 1.51GBPUSD 1.52 1.48 1.55 1.61 1.65 1.68 1.72 1.74AUDUSD 0.929 0.940 0.960 1.000 0.990 0.995 1.000 1.020USDCHF 1.07 1.08 1.05 1.03 1.02 1.03 1.02 1.02USDBRL 1.76 1.80 1.75 1.72 1.70 1.69 1.67 1.65USDMXN 12.2 12.5 12.0 12.5 12.3 12.3 12.0 12.0

| 31

Major Economic Indicators

CANADA 2006A 2007A 2008A 2009A 2010F 2011F

GDP at Market Prices 5.5 5.8 4.4 -4.5 6.4 5.4GDP in $2002 2.9 2.5 0.4 -2.6 3.0 2.5Consumer Price Index 2.0 2.1 2.4 0.3 1.8 2.1Unemployment Rate 6.3 6.0 6.2 8.3 8.2 8.1Current Account Balance (C$ Bn) 20.3 15.6 8.1 -41.3 -31.5 -16.5Pre-tax Profits 5.1 4.1 5.7 -33.2 11.5 15.0Housing Starts (K) 228 229 212 149 210 205

UNITED STATES

GDP at Market Prices 6.0 5.1 2.6 -1.3 3.9 4.6GDP in $2005 2.7 2.1 0.4 -2.4 3.0 2.5Consumer Price Index 3.2 2.9 3.8 -0.4 1.5 2.0Unemployment Rate 4.6 4.6 5.8 9.3 9.9 9.5Current Account Balance (US$ Bn) -803.5 -726.6 -706.1 -410.0 -510.0 -470.0Pre-tax Profits (with IVA/CCA) 10.5 -4.1 -11.8 -7.0 17.5 9.2Housing Starts (Mn) 1.8 1.3 0.9 0.6 0.6 0.8