Wednesday 9/9/2026 p.m.

• Stocks close lower amid rising bond yields and oil prices – North American equity markets closed lower on Wednesday as escalating trade tensions and lingering conflict in the Middle East weighed on investor sentiment. U.S. President Donald Trump announced new restrictions on Canadian imports, including bans on most alcoholic beverages, certain dairy-related products and motorcycles, that are scheduled to take effect on September 29. The measures represent the latest escalation in the trade dispute between Canada and the U.S. WTI crude ended the day above $96 per barrel, while Brent crude, the international benchmark, rose above $100 per barrel. Government bond yields also moved higher, reflecting renewed inflation concerns associated with rising oil prices and the market’s reaction to the U.S. Treasury Department’s announcement that it would repurchase up to $6 billion of outstanding Treasury securities with maturities of 10 to 20 years on Thursday. The 10-year U.S. Treasury yield rose to 4.84%, its highest level since the fall of 2023, while the 30-year yield finished just below 5.3%. Canadian yields followed suit, with the 10-year GoC yield climbing to 3.85%. The rise in yields following the announcement likely reflected expectations for a larger U.S. buyback operation, as well as recognition that the program is unlikely to address the structural forces contributing to higher U.S. long-term rates, including fiscal concerns and inflation uncertainty, in our view.
   
• Geopolitical tensions remain in focus as oil prices rise – Escalating geopolitical tensions have returned to the forefront this week, weighing on equity markets and investor sentiment. On Tuesday, reports of Houthi attacks on Saudi energy facilities sent crude oil prices higher. Overnight, the U.S. reportedly struck multiple Iranian oil tankers, prompting Iran to retaliate with strikes on a U.S.-used air base in Jordan and attempted attacks against U.S. naval vessels, although no damage to U.S. warships was reported. The escalation in military activity over the past week has pushed oil prices higher, with Brent crude, the international benchmark, breaching $100 per barrel and West Texas Intermediate trading above $96 per barrel. While the path forward remains uncertain and there appears to be no clear diplomatic off-ramp, we would remind investors that making portfolio changes in response to geopolitical events has generally not served long-term investors well, historically. Despite a 9% peak-to-trough decline in the TSX during the first quarter, when the conflict began, stocks have staged an impressive recovery. The TSX is up more than 13% year to date, while the S&P 500 has gained more than 11%. Lingering risks in the Middle East could continue to weigh on investor sentiment, add to near-term headline inflation, and constrain households’ discretionary spending. However, resilient global economic activity and robust corporate profit growth continue to underpin our constructive longer-term outlook for equity markets, with a particular preference for Canadian small- and mid-cap stocks, U.S. large-cap stocks and emerging-market equities.
   
• Fed at a crossroads – U.S. inflation trends and their implications for monetary policy will be in focus this week, with the August producer price index (PPI) and consumer price index (CPI) reports due Thursday and Friday, respectively. We believe these readings will be especially important because they represent the final major inflation data ahead of next week’s FOMC meeting. Markets are currently pricing in a roughly 60% probability of an interest-rate increase, which would mark the Fed’s first hike since the summer of 2023 and a reversal in direction after policymakers lowered the federal funds target range from a peak of 5.25%–5.50% to its current range of 3.50%–3.75%. While meaningful progress has been made since headline CPI peaked above 9% in 2022, core inflation has remained above levels consistent with the Fed’s 2% objective for more than five years. Lingering uncertainty in the Middle East further clouds the inflation outlook, with WTI crude oil prices rising above $95 per barrel. Meanwhile, U.S. labour-market conditions, the other side of the Fed’s dual mandate, have stabilized, allowing policymakers to place greater emphasis on inflation, in our view. Although a rate hike next week is not a foregone conclusion, healthy economic and labour-market conditions, combined with inflation that remains too high for comfort, suggest policymakers may have limited tolerance for additional upside inflation surprises. Importantly, however, we expect any renewed Fed tightening cycle to be relatively short-lived. Today’s inflation environment does not appear to feature the same breadth of pressures evident during the immediate post-pandemic period, when widespread labour shortages and annual wage growth above 5% contributed to more persistent inflation.

Brock Weimer, CFA;
Investment Strategy

^{Source for all data: FactSet.}