Tuesday 9/15/2026 p.m.

• Stocks trade lower with elevated yields in focus – North American equity markets closed lower on Tuesday, with elevated bond yields in focus as the 10-year GoC yield closed around 3.94% and the 10-year U.S. Treasury yield finished around 5%. The rise in yields has not been limited to North America, as longer-term Japanese government bond yields moved higher overnight and the benchmark 10-year yield reached a fresh 30-year high. The TSX finished the day lower by roughly 0.4% while the S&P 500 declined by 0.5%. Looking across global equity markets, Asian markets were mostly lower overnight, while European markets followed suit with modest declines. The economic calendar was relatively quiet today, but activity picks up over the remainder of the week, headlined by tomorrow’s Federal Reserve interest-rate decision, where markets expect the Fed to raise interest rates by 0.25 percentage points. In commodity markets, oil prices continued to climb amid uncertainty in the Middle East, with WTI crude closing around $106 per barrel.
   
• All eyes on the Fed – Monetary policy is in focus this week as investors await the Federal Reserve’s interest-rate decision tomorrow afternoon. With underlying U.S. inflation still running above levels consistent with the Fed’s target and uncertainty in the Middle East pushing WTI crude oil back above $100 per barrel, the near-term inflation outlook has become more uncertain. Markets currently assign a 92% probability to a 0.25 percentage-point rate increase at tomorrow’s meeting, which we'd view as the most likely outcome. However, unlike the tightening cycle that began in March 2022 and ultimately lifted the upper bound of the federal funds target range from 0.25% to 5.5%, we expect any renewed tightening cycle to be comparatively short-lived. The inflation backdrop is considerably more favourable today, in our view, than it was at the beginning of the previous cycle. Core CPI was rising 6.5% annually in March 2022, compared with 2.4% in August 2026. U.S. labour-market conditions also appear substantially more balanced. Job openings modestly exceeded the number of unemployed workers in July, compared with roughly two openings for every unemployed worker at the peak in March 2022. The earlier imbalance between labour supply and demand likely contributed to elevated wage growth and broader inflationary pressures, in our view. Today, by contrast, a more balanced labour market and slower nominal wage growth suggest that labour demand is no longer providing the same degree of inflationary pressure. Although measures of U.S. inflation remain uncomfortably high and renewed energy-price pressures could slow further progress, inflation has moderated considerably from its 2022 peak. Against this backdrop, we expect any renewed Fed tightening to be limited in scope and duration. Importantly, we do not expect modest additional increases in interest rates to derail the broader economic expansion or the equity bull market.
   
• Bond yields reach highest level since 2007 – The upward trend in global bond yields continued Tuesday, with the 10-year Government of Canada yield trading around 3.95% and the 10-year U.S. Treasury yield trading near 5%. In our view, elevated global inflation, resilient global economic growth, expectations for tighter global monetary policy, and increased government and corporate bond issuance have all contributed to the recent rise in yields. We believe persistent concerns about U.S. federal deficits have provided an additional source of upward pressure on U.S. Treasury yields. Income is an important component of fixed-income returns, particularly over multiyear periods. As a result, today’s higher starting yields could improve the return outlook for investment-grade bonds over the coming years, helping reinforce their role as a strategic allocation within well-diversified portfolios. In the near term, however, we expect persistent inflation concerns, elevated issuance and uncertainty surrounding the path of global monetary policy to keep yields elevated, limiting the potential for meaningful bond-price appreciation. Alongside our outlook for resilient global economic growth, the limited potential for near-term bond-price appreciation supports our preference for equities and reinforces our overweight to equities relative to bonds.

Brock Weimer, CFA;
Investment Strategy

^{Source for all data: FactSet.}