• Stocks gain on better-than-expected inflation – North American equity markets traded higher Tuesday, supported by a better-than-expected U.S. producer price index (PPI) reading and generally positive earnings results from several U.S. financial services firms. The S&P 500 gained more than 1%, supported by strength in consumer discretionary and communication services sectors, while the TSX posted a 0.6% gain. Overseas, Asian markets closed higher overnight, led by a gain of more than 2% in Japan’s Nikkei, while European equities also finished broadly higher. In fixed income, government bond yields traded lower, with the 10-year GoC yield at 3.43% and the 10-year U.S. Treasury yield at 4.25%. On the geopolitical front, reports that the U.S. and Iran may hold a second round of negotiations contributed to a pullback in oil prices, with WTI crude oil closing around $92 per barrel. The U.S. dollar index also closed lower amid those developments and has retraced to just above its pre-conflict level.
   
• U.S. producer price inflation lower than feared – U.S. producer price inflation for March came in lower than expected, with headline PPI rising 0.5% for the month versus consensus expectations for a 1.1% increase. Core PPI, which excludes food and energy, rose a modest 0.1%. Encouragingly, core goods prices increased just 0.2% in March, marking the slowest monthly gain in four months and potentially signaling that tariff-related pricing pressures are beginning to ease. Services prices were also flat on the month following a string of firmer readings, pointing to broader disinflationary trends. While one month does not establish a trend, the combination of softer producer-price data and a contained core-CPI reading for March suggests that U.S. pipeline inflation pressures remain under control. Both we and the broader market expect the Fed to remain on hold at its April 29 meeting, and we believe policymakers are likely to maintain a cautious approach to any further easing. That said, if geopolitical tensions begin to fade and core inflation remains well behaved, we see scope for another Fed rate cut later in 2026 or 2027.
   
• First-quarter earnings season underway – Corporate earnings are in focus as well on Tuesday, with JPMorgan Chase, Wells Fargo, Citigroup, and BlackRock among the financial firms reporting results. While the stock reactions were mixed, headline results showed that all four companies exceeded earnings expectations. Results highlighted continued strength in market-based businesses, particularly trading and investment banking, which provided a meaningful boost to performance across the group. Additionally, BlackRock cited record ETF inflows as a catalyst for the quarter. While some commentary suggested a more cautious outlook for net interest income, capital-markets activity appears to be on strong footing. At an index level, despite the war in Iran, earnings estimates have held up well. Consensus currently calls for S&P 500 earnings growth of more than 10% in the first quarter and 17% for the full year. We believe that full-year forecast may prove overly optimistic, especially if higher energy prices weigh on corporate profit margins. Still, we think steady labour-market conditions, resilient economic activity, and strong AI-related investment should help support another year of healthy earnings growth and help provide a constructive backdrop for equities over the balance of the year.

Brock Weimer, CFA ;
Investment Strategy

^{Source for all data: FactSet} 

• Markets rebound from U.S. blockade setback – Stocks started the day on the back foot after President Trump announced a blockade of the Strait of Hormuz but recovered to close higher on headlines that Iran had contacted the U.S. administration to discuss a peace deal. WTI oil prices seesawed through the day to finish at $98 per barrel, down from recent highs of $113, but still well above the pre-conflict levels of between $60-$70. The small-cap Russell 2000 index led the way, rising 1.3% over the session, while among the big-cap benchmarks the tech-heavy Nasdaq index was the best performer, up more than 1% today. In Canada, the S&P/TSX index closed 0.5% higher after a similarly bumpy session. Government bonds also shrugged off a weak start to the day to close higher, pushing yields three basis points (0.03%) lower on the 10-year U.S. Treasury note. Canadian government bonds were broadly flat over the session, with voters heading to the polls today for three special elections which could grant Prime Minister Mark Carney's Liberal government an outright majority. Such an outcome would likely lower the risk of confidence votes and provide a potentially easier pathway to pass further legislation. No party has held a House majority in Canada since 2019.
   
• The latest twist and turns in the Middle East – Following last week's exuberance after the announcement of a ceasefire, the news over the weekend out of the Middle East was mostly disappointing. First, talks between the U.S. and Iran in Pakistan failed to deliver any progress toward a durable peace deal, with reports highlighting Iran's nuclear program as a major sticking point. Second, the announcement of a blockade raised fears over more severe and prolonged disruptions to global energy supplies. The blockade started this morning at 10 a.m. ET and will stop all maritime traffic from entering or exiting Iranian ports. This will restrict Iran's ability to ship its own crude through the strait, hitting a major source of income. However, naval interventions raise the risk of a renewed escalation in the conflict, and will add to concerns that we will not see a resumption of oil flows through this critical supply route. It remains to be seen if the contact today between the U.S. and Iranian leadership will help push negotiations meaningfully forward.
   
• A positive earnings season may support the rebound in stocks - Despite the fragile ceasefire and still‑elevated geopolitical risks, stocks are now within 2% of their all‑time highs. We believe this reflects not only optimism around potential de‑escalation of the conflict, but also strong support from rapidly rising corporate profits. U.S. banks kick off the first‑quarter earnings season this week, with Goldman Sachs missing earnings expectations after lower-than-expected trading revenues. However, the broader tone of reports is expected to be more positive. Consensus is looking for S&P 500 revenue to grow nearly 10% year-over-year and earnings to rise 13%. If realized, this would mark the strongest sales growth since 2022 and the fifth consecutive quarter of double‑digit earnings growth. Investor focus will be on management commentary, particularly regarding the impact of high energy prices. Encouragingly, the primary drivers of S&P 500 earnings are not the sectors most negatively exposed to oil prices. Technology, in particular, has seen the largest increase in expected earnings since December 31, with first‑quarter earnings growth now estimated at 44%. Strength in technology has been sufficient to offset weakness in health care and consumer discretionary. Additionally, the energy sector’s earnings sensitivity to oil prices may help offset cost pressures elsewhere in the market, helping provide further support to aggregate earnings growth. This dynamic underpins the roughly 21% earnings growth expected for the TSX, as upward revisions from the energy sector have led analysts to significantly raise their outlook for corporate profits in Canada.

James McCann ;
Investment Strategy

^{Source for all data: FactSet, Bloomberg.} 

• Stocks end mixed, capping a strong week – Equities finished mixed on Friday with the TSX advancing while the S&P 500 posted a modest decline, closing out a strong week overall. Geopolitics remained front and center as the recent relief rally paused, though optimism persisted that the fragile ceasefire could open a path toward a broader Iran peace deal. The U.S. and Iran are set to hold talks on Saturday, with investors watching to see whether Tuesday’s two‑week ceasefire agreement can be extended into something more durable. In commodities, WTI crude slipped to around $96 per barrel and posted a sharp 13% decline for the week. On the macroeconomic front, today’s U.S. inflation data reflected last month’s surge in energy prices, but core inflation rose less than feared, offering some reassurance to markets. In Canada, employment rose a modest 14,000 in March following two months of losses, while the unemployment rate stayed at 6.7%, both coming in mostly in line with expectations. Away from geopolitics, mega‑cap technology stocks, particularly semiconductors, extended this week’s outperformance. Taiwan Semiconductor Manufacturing reported another quarter of record revenue, driven by continued strong demand for AI‑related chips.
   
• U.S. consumer prices jump, but core inflation rises less than expected - The first inflation reading following the start of the conflict reflected a sharp rise in energy prices, with the energy index posting its largest increase since 2005. Headline CPI rose to 3.3% in March from 2.4%, as the gasoline index surged 21% month-over-month, the largest increase since data collection began in 1967. Encouragingly, core inflation rose less than anticipated, increasing 2.6% year-over-year. The supercore index—which tracks services inflation excluding housing and is used to gauge underlying labour‑intensive services inflation—slowed to its weakest monthly pace in eight months. While there will likely be a lag before elevated energy prices filter through various sectors of the economy, we believe today’s data pushes back against the Fed’s rate‑hike narrative. Under our base‑case scenario where oil prices start to slowly normalize, we expect the Fed to cut rates once in the back half of the year, which should help reinforce recent stabilization in bond yields.
   
• A positive earnings season may support the rebound in stocks - Despite the fragile ceasefire and still‑elevated geopolitical risks, stocks are now within 2% of their all‑time highs. We believe this reflects not only optimism around potential de‑escalation of the conflict, but also strong support from rapidly rising corporate profits. U.S. banks kick off the first‑quarter earnings season next week. Consensus expects S&P 500 revenue to grow nearly 10% year-over-year and earnings to rise 13%. If realized, this would mark the strongest sales growth since 2022 and the fifth consecutive quarter of double‑digit earnings growth. Investor focus will be on management commentary, particularly regarding the impact of high energy prices. Encouragingly, the primary drivers of S&P 500 earnings are not the sectors most negatively exposed to oil prices. Technology, in particular, has seen the largest increase in expected earnings since December 31, with first‑quarter earnings growth now estimated at 44%. Strength in technology has been sufficient to offset weakness in health care and consumer discretionary. Additionally, the energy sector’s earnings sensitivity to oil prices may help offset cost pressures elsewhere in the market, helping provide further support to aggregate earnings growth. This dynamic underpins the roughly 21% earnings growth expected for the TSX, as upward revisions from the energy sector have led analysts to significantly raise their outlook for corporate profits in Canada.

Angelo Kourkafas, CFA ;
Investment Strategy

^{Source for all data: FactSet, Bloomberg.} 

• Markets close mixed as investors monitor U.S.-Iran ceasefire – The TSX finished lower, while U.S. equity markets advanced on Thursday, with the consumer discretionary and industrial sectors leading gains. Bond yields moved higher, with the 10-year Government of Canada yield at 3.46% and the 10-year U.S. Treasury yield at 4.29%. In international markets, sentiment was weaker, with Asia declining overnight and Europe trading lower. The U.S. dollar weakened against major currencies. In energy markets, WTI oil rebounded toward $99 per barrel as disruptions persist in the Strait of Hormuz amid disputes over the terms of the U.S.-Iran ceasefire. However, futures pricing still reflects the view that this disruption could be temporary, implying that WTI could drift back toward the mid-$70 range by year-end.
   
• Fed's preferred inflation measure in line with estimates – U.S. headline personal consumption expenditure (PCE) inflation held steady at 2.8% annualized in February, matching forecasts. A modest pickup in goods inflation to 1.8% year over year was offset by continued improvement in services inflation, which slowed to 3.3%, the lowest reading in five years. Importantly, housing inflation eased to 3.1%, a key driver in moderating services inflation. Core PCE, which excludes more-volatile food and energy prices, edged down to 3.0%, a positive step, though still well above the Fed's 2% target. Inflation is widely expected to reaccelerate as higher oil prices feed through, at least temporarily. As a result, we expect the Fed to maintain its recent pause on rate cuts. We think the stabilizing labor market should give policymakers room to be patient to confirm that higher inflation does not become persistent.
   
• Jobless claims rise modestly – U.S. initial jobless claims increased to 219,000 this past week, above the 210,000 consensus estimate. Continuing claims — reflecting the total number of people receiving benefits — fell more than expected to 1.79 million, suggesting more workers are finding new employment. Taken together, we think these figures are consistent with other recent data pointing to a stabilizing labor market. Slower job creation alongside a moderate pace of layoffs should help keep wage gains running modestly above inflation, in our view. However, price pressures could pick up due to energy costs, potentially raising the bar for real wage gains.

Brian Therien, CFA ;
Investment Strategy

^{Source for all data: FactSet.} 

• Markets rally on U.S.-Iran ceasefire – North American equity markets traded firmly higher on Wednesday following Tuesday’s announcement that the U.S. and Iran have agreed to a two-week ceasefire, contingent on the reopening of the Strait of Hormuz. Equity markets rallied sharply in response, with the TSX up roughly 1% and the S&P 500 gaining 2.5%. Overseas, Asian equities posted strong overnight gains, with Japan’s Nikkei rising more than 5%, while South Korea’s KOSPI Index surged nearly 7%. European equity markets followed suit, closing higher by roughly 5% on Wednesday. Government bond yields moved lower globally as investors reassess expectations for central-bank monetary policy. The 10-year GoC yield declined to around 3.44%, while the 10-year U.S. Treasury yield closed near 4.29%. Oil prices were sharply lower, with WTI crude down roughly 15% and closing around $96 per barrel. Easing geopolitical tensions also weighed on the dollar, with the greenback down nearly 1% against a basket of developed-market currencies.
   
• U.S.-Iran ceasefire provides boost to global equity markets – The two-week ceasefire announced yesterday evening drove strong gains across global equity markets, while oil prices and global government bond yields declined. We expect markets to remain sensitive to headlines in the coming weeks, particularly as negotiations progress during the ceasefire period. That said, we view yesterday’s announcement as a constructive step toward a more durable resolution, especially if tanker traffic through the Strait of Hormuz is able to resume. We continue to see attractive opportunities in global equity markets, and we recommend that investors consider an overweight to equities relative to bonds. Specifically, we believe opportunities are attractive in U.S. stocks, which stand to benefit from sustained AI-related investment and steady economic growth. Overseas, we see attractive opportunities in developed small- and mid-cap equities, where valuations appear compelling, as well as in emerging-market equities, which could benefit from continued enthusiasm around AI.
   
• Decline in oil prices a welcome development for inflation, though normalization will take time — Oil prices are sharply lower on Wednesday following the ceasefire announcement, with WTI crude down roughly 15% to around $96 per barrel. While uncertainty remains elevated, we view the ceasefire as a constructive step toward ending the conflict in Iran and restoring crude oil flows through the Strait of Hormuz. That said, even if traffic resumes, we expect global oil supply normalization to take time, with prices likely to remain elevated relative to pre-conflict levels in the months ahead. Consistent with this view, futures markets currently expect crude oil prices to end the year at around $75 per barrel—little changed from prior to the ceasefire announcement, and well above the sub-$60 levels seen at the start of the year. Persistently elevated oil prices are likely to put upward pressure on headline inflation and may also feed into core inflation as businesses seek to pass through higher energy costs. The key takeaway, however, is that should a durable resolution to the conflict be achieved, we believe central banks will be more inclined to look through any resulting inflationary pressures as a one-off increase. Thus, we expect the Bank of Canada to remain on hold in the near term. In the U.S., while rate cuts may be delayed, we continue to expect one to two additional Fed interest-rate cuts over the remainder of this cycle.

Brock Weimer, CFA ;
Investment Strategy

^{Source for all data: FactSet.}