• Stocks end mixed to start the week – The TSX managed to eke out a small gain while global stock market indexes ended modestly lower, with semiconductor stocks lagging ahead of NVIDIA's closely watched earnings report on Wednesday. Long-term government yields declined lower as bonds rebounded from last week's sell-off, supported by reports that the U.S. Treasury Department could utilize its Treasury General Account to help fund buybacks and provide additional liquidity to the market. In commodities, WTI crude oil fell 2% to $85 per barrel as Treasury Secretary Bessent unveiled a new global sanction plan to isolate Iran's economy. On the trade front, U.S.-Canada negotiations broke down on Friday, triggering new U.S. tariffs of 50% on roughly $20 billion of Canadian goods and prompting the government to pledge dollar-for-dollar retaliatory measures beginning September 8. In turn, the U.S. president threatened to double the tariffs on Canadian vehicles and parts to 50%, effective January 1. The developments weighed on the Canadian dollar, while gold climbed to its highest level in three months as investors sought safety amid rising geopolitical and trade uncertainty. Overall, markets appear to be balancing trade and geopolitical concerns against easing bond yields and anticipation surrounding NVIDIA's earnings, which could provide an important gauge of AI-related spending and broader market sentiment.
   
• New tariffs take effect as U.S.-Canada trade talks break down – Trade tensions between the U.S. and Canada escalated as the latest round of U.S. tariffs moved forward following the breakdown of trade negotiations. The new measures impose a 50% tariff on roughly $20 billion of Canadian exports, equivalent to about 5% of Canada's exports to the U.S. While the headline tariff rate is significant, the broader economic impact is likely to be more contained. More than 80% of Canadian exports would still enter the U.S. duty-free under CUSMA exemptions, and the affected products represent only a small share of overall Canadian GDP. That said, the impact will be felt unevenly. Industries including plastics, electrical equipment, furniture, wood products, and certain manufacturers with heavy U.S. exposure are likely to face the greatest pressure, particularly in Ontario, Quebec, and British Columbia. Beyond the direct economic costs, the bigger concern may be the continued unpredictability of U.S. trade policy, which can weigh on business confidence and investment decisions. Even so, Canadian firms have shown increasing resilience after more than a year of tariff threats, with signs that investment and sentiment have begun stabilizing despite an uncertain trade backdrop.
  
  From an economic perspective, our view is that the new tariffs represent a headwind but are not large enough to derail Canada's recovery, particularly given the government's pledge to provide financial support for businesses caught in the crossfire. The added uncertainty also increases the likelihood that the Bank of Canada remains on hold, in our view, as tariff-related risks to growth offset some of the inflationary pressures that could emerge from the dollar-for-dollar retaliatory measures announced by Prime Minister Mark Carney, which are scheduled to take effect on September 8 and may still leave room for further negotiations.
   
• For investors, market fundamentals remain more important than trade headlines - The TSX has relatively large weights in energy, and precious metals, which have recently benefited from geopolitical tensions, firmer commodity prices, and a softer U.S. dollar. In that sense, Canadian equities may provide a degree of diversification and a natural hedge against some of the policy uncertainty emanating from Washington. While trade headlines could create periods of volatility, we believe investors should remain focused on the underlying fundamentals, which continue to point to a resilient Canadian economy and earnings backdrop despite a more challenging trade environment.

Angelo Kourkafas, CFA;
Investment Strategy

^{Source for all data: Bloomberg.}

• Markets rebound on Friday – U.S. and Canadian equity markets were higher across the board on Friday as investors looked for buying opportunities after a near 2.0% sell-off in the S&P 500 earlier this week. The Canadian TSX outpaced the S&P 500 and the tech-heavy Nasdaq. This comes as Canada and the U.S. move closer to finalizing a trade deal that would avoid 50% tariffs on roughly $20 billion of Canadian goods. Meanwhile, U.S. Treasury Secretary Bessent announced on Wednesday that the Treasury would at least double its buybacks of longer-dated Treasury securities, increasing purchases from roughly $2 billion to at least $4 billion, and suggested the buybacks could be expanded further if needed. He also noted that the administration would unveil a plan for fiscal consolidation in the days ahead. While Treasury yields have stabilized somewhat, they remain near the highs of the year, with the 10-year yield at about 4.73% and the 30-year yield at around 5.27%. In our view, the U.S. 10-year yield is likely to remain in the 4.5% to 5.0% range, and upcoming inflation readings will likely be critical inputs for both yields and the Federal Reserve interest rate decision.
   
• What do higher yields mean for investors? – Treasury yields are close to the highs of the year, with the 30-year Treasury yield near the highest level since 2007. What do higher yields mean for investors? First, the cost of borrowing increases, both for consumers, in areas like mortgages and auto loans, and for corporations looking to tap the debt market. But keep in mind, this economy has been able to grow steadily even with fluctuating yields. Higher yields also mean there is an alternative to equity markets, which can put downward pressure on stocks and valuations. Perhaps the silver lining is that for savers, or for those in retirement, near retirement or just looking for income, higher Treasury yields may provide that income opportunity. In addition, from the perspective of the Federal Reserve, higher yields also mean that the market is doing some form of tightening for the Fed.
   
• U.S. economic surprise index moves lower this month – The Citi U.S. economic surprise index, a measure of how U.S. economic data comes in versus forecast, has moved lower in recent weeks, indicating some cooling of the momentum in the U.S. economy. The index, which peaked at around 63 in early June, is now around 21 levels, suggesting economic surprises are still positive, but the magnitude and frequency of these upside surprises have eased. This likely has been driven by weaker-than-expected nonfarm-jobs reports as well as softer retail-sales and inflation readings. Overall, we believe that the U.S. economy has remained resilient, but that the Federal Reserve may consider this recent cooling as it debates whether to raise rates at the September FOMC meeting. In our view, if this backdrop of elevated Treasury yields and moderating economic data holds, the Fed may keep rates steady rather than raise rates and risk further deterioration in consumption and growth.

Mona Mahajan;
Investment Strategy

^{Source for all data: FactSet.}

• Markets close lower as bond yields rebound – The TSX and U.S. equity markets ended lower on Thursday as bond yields reversed some of yesterday's decline. The 10-year Government of Canada yield rose to 3.75%, and the 10-year U.S. Treasury yield finished near 4.70%. Consumer staples and consumer discretionary stocks led markets lower, while energy outperformed on higher oil prices. The weakness in consumer-oriented sectors, combined with the rebound in yields, suggests investors remain sensitive to the outlook for household spending and interest rates, in our view. In international markets, Asia finished higher overnight, while Europe ended mostly lower. In energy markets, WTI oil extended its recent advance to about $87 per barrel amid ongoing disruptions in the Strait of Hormuz. The U.S. dollar was little changed against major currencies.
   
• Walmart headlines a busy week for retail earnings – Walmart, widely viewed as a bellwether for consumer spending, reported solid second-quarter results, with earnings and revenue exceeding forecasts. However, the company's outlook was softer than expected, weighing on its shares, which were down about 9% on the day. Together with other recent data, Walmart's stronger-than-expected sales provide further evidence that consumer spending remains resilient, in our view. With the unemployment rate contained at 4.1% and 7.4 million job openings still exceeding the 6.9 million unemployed workers, we expect the stable labour market to continue to provide growing income to help support household spending and the broader economy.
   
• Leading economic index strengthens – The Conference Board's U.S. Leading Economic Index (LEI) rose 0.2% in July to 99.5, exceeding forecasts for a 0.1% increase. The index is designed to provide an early signal of potential turning points in the business cycle and the near-term direction of the economy. July's improvement was driven primarily by lower unemployment claims, higher housing permits, and a steeper yield curve. The index's six-month change turned positive for the first time in more than four years and is not currently signaling recession risk. Overall, we believe these readings remain consistent with a resilient economy, as labour-market stability and improving housing indicators offset weak consumer expectations and softer manufacturing orders.

Brian Therien, CFA;
Investment Strategy

^{Source for all data: FactSet.}

Wednesday 8/19/2026 p.m.

• Markets edge higher as bond yields pull back – The TSX and U.S. equity markets closed higher on Wednesday, supported by a decline in bond yields following the announcement of increased U.S. Treasury buybacks. Lower yields appeared to provide a near-term tailwind for equity valuations. In international markets, Asia and Europe finished mostly lower. In energy markets, WTI oil prices extended their recent advance, currently near $84 per barrel amid continued disruptions in the Strait of Hormuz. The U.S. dollar declined against major currencies, consistent with the drop in Treasury yields.
   
• Bond yields decline following U.S. Treasury buyback announcement – Bond yields moved lower today, with the 10-year Government of Canada yield near 3.69% and the 10-year U.S. Treasury yield near 4.64%. The decline followed the U.S. Treasury announcement that it will roughly double the size of its liquidity-support buyback operations for longer-dated securities in the 10-year to 30-year maturity range. The change will take effect September 9, 2026, and remain in place until at least November 4, 2026. The Treasury noted that the larger operations are intended to improve liquidity in longer-dated securities. In our view, the announcement may help ease near-term liquidity pressures and improve market functioning, which could support prices and place downward pressure on yields, particularly for long-term bonds. However, it does not address what we consider the key factors driving bond yields, including federal budget deficits, inflation expectations, rising AI-related borrowing, and Federal Reserve policy.
   
• U.S. pauses proposed 50% tariffs on select Canadian goods – The Trump administration suspended the previously announced 50% tariffs for three days, allowing additional time for negotiations. The administration said Canada had expressed a commitment to reduce or remove certain tariffs and other trade barriers affecting U.S. exports. The proposed U.S. tariffs would have applied to nearly $20 billion of Canadian goods, primarily in the automotive, alcoholic beverage and dairy industries. Certain qualifying goods covered by the Canada-U.S.-Mexico Agreement (CUSMA) would also be subject to the tariffs. However, exemptions would limit the affected trade to about 5% of the $382 billion in Canadian imports in 2025. The pause reduces the immediate risk of escalation, but its short duration means some uncertainty remains, in our view. Until a broader agreement is reached, businesses in the affected industries may continue to face planning challenges, potential supply-chain disruptions, and uncertainty over future costs.

Brian Therien, CFA;
Investment Strategy

^{Source for all data: FactSet.}

• Stocks close lower amid elevated interest rates – North American equity markets closed lower on Tuesday, as elevated bond yields and weakness in technology stocks weighed on sentiment. In Canada, the S&P/TSX Composite declined as weakness in the materials, financials and technology sectors more than offset gains in the energy sector. After moving higher early in the day, longer-term bond yields finished little changed, with the 10-year Government of Canada yield closing around 3.7%. South of the border, the 10-year U.S. Treasury yield closed at 4.7%, while the 30-year yield finished around 5.28%. Despite pulling back over the course of the day, 10-year government bond yields in both Canada and the U.S. remain near their year-to-date highs. From a market-leadership perspective, materials were a notable laggard in Canada, amid a pullback in precious-metals prices. The S&P 500 technology sector also underperformed, with weakness in semiconductor stocks weighing on the sector and contributing to a 1.3% decline in the Nasdaq. Meanwhile, energy outperformed in both markets, supported by a modest rise in oil prices and ongoing uncertainty about developments in the Middle East. Defensive sectors of the S&P 500, including health care and consumer staples, also outperformed, reflecting a more defensive posture across markets on Tuesday. On the trade front, the U.S. is scheduled to impose a 50% levy on roughly $20 billion of Canadian goods on Wednesday morning. However, negotiations are reportedly ongoing, with Prime Minister Mark Carney and U.S. President Donald Trump expected to speak again Tuesday ahead of the deadline.
   
• U.S. Treasury yields edge higher, weighing on sentiment – Despite a modest decline today, U.S. Treasury yields have moved modestly higher this week, particularly at longer maturities, with the 10-year Treasury yield trading around 4.71% and the 30-year yield near its highest level since 2007, at 5.28%. There has been limited incremental economic news to explain the move higher in yields, particularly because the move higher has followed encouraging U.S. inflation data and a repricing of Fed expectations toward keeping rates on hold in September. Rather, markets seem to be responding to several factors that are placing upward pressure on yields. First, the Securities Industry and Financial Markets Association (SIFMA) reported that, through July, U.S. investment-grade corporate bond issuance was nearly 30% higher than during the same period last year. In our view, elevated investment-grade bond supply could be contributing to the move higher in yields. Another factor likely contributing to higher yields is ongoing uncertainty in the Middle East, which has pushed WTI crude oil prices back above $80 per barrel. Additionally, we think U.S. fiscal concerns may be placing upward pressure on longer-maturity yields after the U.S. recorded its largest monthly budget deficit since March 2021 in July. In the near term, we expect these factors, along with a generally healthy economic backdrop, to keep longer-term yields elevated. We expect the 10-year U.S. Treasury yield to remain within a range of 4.5% to 5.0% over the remainder of the year.
   
• Retail earnings in focus – Retail earnings are in focus Tuesday, with investors digesting results from home-improvement retailer Home Depot, which reported better-than-expected earnings and sales for the quarter. Management noted broad-based demand across the business, with a 2.8% increase in average ticket size and customers’ continued willingness to take on smaller projects helping drive the better-than-expected results. Additionally, management reaffirmed its full-year guidance, highlighting, in our view, cautious optimism about consumer spending trends. Consumer spending trends should remain in focus, with Lowe’s, TJX, Ross Stores, and Walmart scheduled to report later this week. Despite a soft July retail-sales report last Friday, we expect household spending to remain steady over the remainder of the year. While the benefits of U.S. tax refunds earlier this year are likely behind us and elevated oil prices could continue to weigh on discretionary spending, stable labour-market conditions and healthy household balance sheets should continue to support spending through year-end, in our view.

Brock Weimer, CFA;
Investment Strategy

^{Source for all data: FactSet.}