Daily market snapshot

• Stocks rise despite new tariff announcements – The TSX reached a new record high, while U.S. equity markets reversed an early pullback to close higher on Monday despite President Trump announcing 30% tariffs on the European Union and Mexico over the weekend.* New tariffs are set to take effect August 1. Bond yields ticked up, with the 10-year Government of Canada yield at 3.49% and the 10-year U.S. Treasury yield at 4.43%, below its May peak near 4.60%.* Communication and financial stocks posted the largest gains, while the energy and materials sectors lagged. In international markets, Asia finished mixed overnight, as China's trade surplus grew to a higher-than-expected $115 billion in June, despite the effects of tariffs.* Europe was down on the new 30% U.S. tariffs on exports from the European Union.* The U.S. dollar advanced against major international currencies. In commodity markets, WTI oil traded lower as markets assess the possibility of U.S. sanctions on buyers of Russian crude.*
   
• Markets await CPI inflation data – U.S. consumer price index (CPI) inflation for June will be released on Tuesday, with estimates calling for the headline figure to rise to 2.6% annualized, from 2.4% the prior month. Core CPI inflation, which excludes more-volatile food and energy prices, is expected to increase to 3.0% year-over-year, from 2.8% in May.* Inflation is forecast to rise over the coming months as tariffs begin to flow through to end consumers, putting upward pressure on prices. However, most of this impact should be near-term price hikes that aren't a driver of ongoing inflation, in our view. Bond markets are pricing in inflation of about 2.37% over the next 10 years, indicating that long-term inflation expectations remain well anchored.**
   
• Earnings season kicks off this week – Corporate earnings for the second quarter will start to be released this week, led by the major banks. Earnings growth is expected to slow to 3.7% year-over-year for the S&P 500, down considerably from 12.8% in the first quarter*, likely affected by disruptions from policy uncertainty and tariff shifts in recent months. Markets will likely watch carefully to see how tariffs are impacting corporate revenue and profit margins. Earnings growth is expected to be led by the communications and technology sectors, while energy and consumer discretionary companies are forecast to experience the steepest earnings contraction. Earnings growth is forecast to rise over the quarters ahead, combining for 8.5% growth for 2025.* While we believe this figure could be revised lower as tariffs likely weigh on corporate profit margins, earnings should be sufficient to support stock prices over time, in our view.

Brian Therien, CFA
Investment Strategy

^{*FactSet **Federal Reserve Bank of St. Louis}
 

• Markets dip to close the week – U.S. equities fell today in the wake of further tariff announcements from the Trump administration*. The S&P 500 was down 0.3% at the close from its record high yesterday, with the Dow Jones down an even steeper 0.6% and the Russell 2000 down 1.3%*. Canadian equity-markets were also softer, losing 0.3% by the end of the day*. The sell-off extended into government bond markets too, with yields rising as investors worry about the inflationary impact of tariffs. The U.S. 2-year Treasury yield finished the day up 2 basis points higher (0.02%) and the 10-year yield was up 7 basis points, driving a steepening in the yield curve* and supporting a moderate appreciation in the dollar against a trade-weighted basket of currencies*. Oil staged a rebound from its steep decline yesterday*.
• More tariff threats – President Trump announced a higher 35% tariff rate on Canada last night, in response to ongoing complaints over fentanyl imports and Canada's 400% tariff on U.S. dairy products*. The rate will come into force on August 1 and apply to goods not compliant with the USMCA trade agreement*. It will apparently stack on top of other sectoral tariffs on steel and aluminum, but energy-related products will remain at 10%*. More broadly, the president signaled an intention to raise blanket tariff rates to 15%-20% from the 10% baseline tariff in place at present*. He also signaled that the EU would receive a tariff letter shortly outlining its tariff rate to come into force August 1 absent a trade agreement**. Markets had largely brushed off tariff announcements this week, in part reflecting confidence that many of these measures could be averted by trade deals, or further delays in implementation. However, the president is seemingly setting up August 1 as another key deadline around trade policy, and the risk of deeper disruptions to the economy and markets from tariffs is rising again, in our view.
• Earnings in focus next week - Earnings reports from the second quarter will start to roll in next week, with markets likely watching carefully to see how tariffs are impacting corporate profits and margins. Analysts are expecting 5% annual earnings growth for S&P 500 companies in aggregate, well down from the 13% in the first quarter of this year, according to FactSet consensus estimates*. Expectations have fallen to already capture some of the disruptions seen from policy uncertainty and tariff shifts in recent months. However, markets will be watching closely to see if this impact is more or less pronounced in the earnings data, and which segments of the corporate sector are worst affected.

Investment Strategy

^{*FactSet
**Bloomberg} 
 

Thursday, 07/10/2025 p.m.

• Stocks rally to new highs – The S&P 500 and Nasdaq hit new record highs today, as markets appeared to brush off tariff concerns, with Canadian equities also gaining on the day. Small-cap equities performed even better, with the Russell 2000 up 0.5%, extending its gains over the past five days to 1.7%. However, this index remains some 7% off its all-time high seen in November of last year*. Meanwhile, an early sell-off in U.S. government bonds was reversed after a well-received auction for 30-year Treasuries, and the U.S. dollar was stable against a trade-weighted basket of international currencies. In commodity markets, oil prices continued to slide following yesterday's stronger-than-expected U.S. supply data and more subdued demand forecasts from OPEC**. News reports suggest that OPEC+ countries are discussing a pause in planned production increases from October*.
   
• A new day, a new tariff – President Trump has threatened a 50% tariff on goods imported from Brazil, unless legal proceedings against former President Bolsonaro are halted*. The U.S. imported $42 billion in goods from Brazil last year*, implying a $21 billion effective annual tax on this trade if implemented and sustained at these levels. This follows a host of tariff announcements this week, with the administration setting new reciprocal tariff rates for many trade partners to come into force on August 1, unless trade agreements can be reached beforehand*. The president also clarified yesterday that the proposed 50% tariff on copper, the world's third most widely used metal, will go into effect at the same time**, driving a rise in copper futures prices*. The U.S. produces just half of the copper it consumes each year***, meaning that domestic industries using this metal in their production process would face steep increases in costs. For now, the market is seemingly looking through much of this tariff news in anticipation that trade deals, or further delays, mitigate their impact. However, the risk of deeper disruptions to the economy and markets from tariffs is rising again, in our view. 
   
• Few signs of labor-market distress – New claims for unemployment insurance fell again last week and continue to trend at low levels, with firms seemingly reluctant to let go of staff*. However, continuing claims, a measure of people receiving ongoing benefits, continues to rise, and at nearly 2 million stands at the highest level seen since late 2021*. This is consistent with cautious hiring, which may well reflect uncertainty in the corporate sector over the outlook for trade policy and the economy. The Fed is also struggling to see through this fog, and the minutes from its June meeting released yesterday suggest that most members are happy to wait and see how trade developments, and their impact on the real economy, evolve before changing policy****. This makes any cut at the upcoming meeting in late July unlikely, but a September move is possible, in our view, depending on how data on inflation and the labor market shape up over the summer.
   

Investment Strategy

^{*Bloomberg 
**FactSet
***Reuters
**** U.S. Federal Reserve Bank} 

• Stocks rise amid new tariff announcements – The TSX and U.S. equity markets closed higher on Wednesday, as President Trump announced new tariffs on seven countries. Utility and technology stocks led to the upside, while the consumer staples and energy sectors lagged. In international markets, Asia finished mixed overnight, as China's CPI inflation rose to 0.1% annualized in June, above forecasts for a smaller increase to 0.0%.* The U.S. dollar declined against major international currencies. In commodity markets, WTI crude oil traded lower, as U.S. supply stocks rose unexpectedly.*
   
• Trade remains in focus – President Trump has announced new tariffs on 21 countries this week, with tariff rates in the 20%-40% range.** For countries not reaching trade deals, new tariffs are scheduled to be applied on August 1, which is an extension from the previously announced July 9 end to the 90-day pause. The new tariffs are modestly lower overall — by about three percentage points on average — from those announced on April 2, perhaps signaling some flexibility. Vietnam secured a trade deal with the U.S. on July 2 that imposes a 20% tariff on imported goods originating within that country, a significant drop from the 46% figure announced in April.* The U.K. previously reached a trade agreement that charges 10% duties on exports to the U.S. Based on announced trade deals, though a small sample size of just two, reductions from announced tariff rates appear to be achievable, in our view. We believe any progress in finalizing trade agreements over the coming weeks and months should reduce uncertainty, while any flexibility in lowering tariffs should help contain inflation and growth concerns.
   
• Bond yields edge lower – Bond yields fell, with the 10-year Government of Canada yield at 3.34% and the 10-year U.S. Treasury yield at 4.34%. The U.S. Treasury auctioned $39 billion of 10-year notes and $65 billion of four-month bills today, which were well-received by markets. Over the coming months, the Treasury will seek to replenish its general account, which was drawn down over the first half of the year. Since reaching the debt ceiling in January, government budget deficits have been funded by account balances and investments. The new tax and spending package – the One Big Beautiful Bill Act – raised the debt ceiling by $5 trillion on July 4, allowing for the Treasury to issue new debt to fund deficits.
   

Brian Therien, CFA
Investment Strategy

^{*FactSet **Whitehouse.gov}

• US stocks stumble – US large cap equities were mostly lower today, with the S&P 500 large cap index down 0.1%, the Dow Jones falling 0.4% and the NASDAQ broadly flat, while Canadian equities also faltered (-0.4%)*. Small cap stocks were the best performers, with the Russel 2000 index up 0.8% *. This followed a mixed tone in overnight equity markets, with major Asian indexes up, but European markets struggling*. Bonds sold off globally, in a move that looks to have originated in Japan as markets fret over the implications of the upcoming election for the fiscal outlook*. However, US Treasuries pared losses late in the trading session to leave yields broadly unchanged over the day. Finally, oil is up 0.5%, the dollar appreciated by 0.4% against a trade weighted basket of currencies, and copper futures spiked nearly 10% to new record highs after the President threatened to increase tariffs*.br>  
• Tariffs back in the spotlight – The Trump administration announced new reciprocal tariff rates for many of its major trading partners yesterday and warned today that if trade deals cannot be agreed then these would be strictly enforced at the August 1st deadline*. The President also announced an intention to raise tariffs on copper imports to 50%, albeit without specifying when this new rate would go into effect*. Chile is by far the largest exporter of copper to the US, although Canada accounts for around 15% of imports**. Finally, Trump warned that pharmaceutical tariffs could spike as high as 200% unless companies start producing these products in the US over the next 18 months*. The renewed headlines around tariffs have shifted market attention back to trade policy and could cause spikes in volatility over the summer. In our view, agreements with major trade partners should avert the worst of the threatened tariff increases, but this week's announcements highlight the risk of a more disruptive path for trade policy. 
   
• A quiet week on the economic data front – Markets will have limited macro data to digest this week, with the minutes from the June Federal Reserve Bank meeting, released Wednesday, and initial unemployment insurance claims, due Thursday, the highlights. Today's NFIB small business sentiment survey showed a small decline in confidence as firms penciled in a more cautious outlook for sales and hiring*. At the same time, a greater share of small business owners are signaling an intention to raise prices*, likely reflecting the impact of tariff increases already put in place. Indeed, we think the impact of tariffs will be more pronounced across inflation and activity data over coming months, as firms are forced to pass these increased costs through to consumers in the face of squeezed margins. However, we don’t think this headwind will be severe enough to threaten the business cycle, with growth most likely to slow as opposed to stall.

James McCan
Investment Strategy

^*Bloomberg

^{**National Minerals Information Center}