Tuesday, 10/20/2026 p.m.

• Markets close higher on broad strength across sectors – The TSX and U.S. equity markets ended higher on Tuesday, with broad participation across most sectors, led by health care and real estate. Bond yields declined, with the 10-year Government of Canada yield at 3.90% and the 10-year U.S. Treasury yield near 5.11% as investors scaled back expectations for a Fed rate hike later this month. Internationally, Asian equities finished mixed, while European stocks were broadly lower. WTI crude pulled back as markets weighed diplomatic efforts aimed at easing Middle East supply disruptions. The U.S. dollar weakened modestly against most major currencies, consistent with lower Treasury yields.
   
• Hiring slows but remains healthy – U.S. private employers added an average of 18,500 jobs per week for the four weeks ended October 3, down from 26,000 in the previous report, according to ADP. The decline follows six consecutive increases in the four-week average, and the one weaker reading alone does not establish a sustained deterioration in hiring. Unemployment remains contained at 4.2%, while the roughly 7.1 million job openings are about equal to the number of unemployed workers. These figures suggest a broadly balanced labour market, in our view. Continued job gains should help support household incomes and consumer spending, while a modest cooling in the pace could help ease wage-related inflation pressures. In our view, the Fed is likely to hold rates steady this month but remains on track for further tightening. The timing of the policy path may depend on incoming inflation and employment data over the months ahead.
   
• Housing starts weaken, while permits hold steady – U.S. privately owned housing starts fell in September to a seasonally adjusted annual rate of 1.22 million, below estimates of 1.30 million. Building permits, a forward-looking indicator of residential construction, were little changed at an annualized pace of about 1.4 million, modestly above forecasts for 1.39 million. Elevated mortgage rates, with the average 30-year fixed rate near 7.4%, continue to constrain housing demand. Although residential construction activity has weakened, continued strength in data-center and other nonresidential construction has provided an offset, helping support overall investment and economic growth. The relative stability of permits also suggests that builders have not abandoned future projects, although actual construction may remain subdued.

Brian Therien, CFA;
Investment Strategy

^{Source for all data: FactSet}