• Stocks rise with U.S. inflation in focus – North American equity markets traded higher on Wednesday following the release of U.S. Consumer Price Index (CPI) data for July. Headline CPI rose 3.4% year-over-year, while core CPI increased 2.5%, with both measures matching consensus expectations. From a leadership perspective, the TSX and Nasdaq outperformed, gaining 0.6% and 0.5%, respectively, while the S&P 500 also posted a modest gain. Bond yields closed little changed following the in-line inflation reading, with the 10-year U.S. Treasury yield ending the session at approximately 4.69% while the 10-year GoC yield fell to 3.68%. In commodity markets, oil prices were little changed as investors continued to await greater clarity on the outlook for the Strait of Hormuz.
   
• U.S. inflation eases in July, matching expectations – U.S. headline CPI rose 0.1% in July and 3.4% from a year earlier, matching consensus expectations. Core CPI, which excludes food and energy, increased 0.2% for the month and 2.5% year-over-year, also in line with expectations. Encouragingly, the July reading brought the three-month annualized rate of core CPI down to 1.6%, the first reading below the Fed's 2% inflation target since December 2025. Looking at the underlying drivers, shelter inflation, which accounts for more than one-third of the CPI basket, rose a modest 0.1% for the second consecutive month. Additionally, sluggish U.S. home-price growth in recent months suggests the potential for further moderation in shelter inflation over the coming months. On the other hand, core goods prices posted their largest monthly increase since September of last year, as upward pressure on used vehicle and consumer electronics prices filtered through, with the latter perhaps reflecting recent price increases announced by Apple. Overall, we believe today's report suggests that higher oil prices have not created broad-based inflationary pressures across core categories. Combined with a contraction in payrolls in July, the data could help support a patient approach from the Federal Reserve with respect to future monetary-policy actions. That said, the August inflation report will likely play a key role in shaping expectations ahead of the September policy meeting.
   
• Consumer check-in ahead – In addition to another key inflation reading, this week will also provide a look into recent U.S. consumer-spending trends, with July retail sales scheduled for release on Friday. Expectations are for the headline figure to rise 0.1% month-over-month, while control-group retail sales, which exclude categories such as motor vehicle and parts dealers, gasoline stations, building materials, and restaurants and bars, are expected to increase 0.4%. More recently, evidence has pointed to solid consumer-spending trends. Control-group retail sales grew at a three-month annualized rate of 8.0% through June, while real personal consumption expenditures increased at a 3.2% annualized rate in the second quarter. That marked the strongest pace of growth in a year and highlighted the resilience of household spending despite higher oil prices. We expect U.S. consumer-spending trends to remain healthy in the coming months, supported by steady labour-market conditions despite slowing job growth, and generally healthy household balance sheets.

Brock Weimer, CFA;
Investment Strategy

^{Source for all data: FactSet.}

• Markets close mixed ahead of this week's inflation reports – The TSX reached a new record closing high, while U.S. equity markets ended lower on Tuesday as investors look ahead to tomorrow's U.S. Consumer Price Index (CPI) report. Bond yields also declined, with the 10-year Government of Canada yield at 3.71% and the 10-year U.S. Treasury yield near 4.69%. International markets were mixed across Asia and Europe. In energy markets, WTI oil prices rebounded near $83 per barrel as markets weighed diplomatic efforts to ease disruptions in the Strait of Hormuz. The U.S. dollar was little changed against major currencies.
   
• Market focus shifts to inflation –July's U.S. CPI report will be released Wednesday, with forecasts calling for headline inflation to ease to 3.4% year-over-year, from 3.5% in June. Core CPI, which excludes the more volatile food and energy components, is forecast to cool to 2.5%, down from 2.6%. The July Producer Price Index (PPI) report, due Thursday, is expected to show a more pronounced slowdown in wholesale inflation, although from a higher starting point. A broadly in-line or softer set of readings should help reinforce the view that inflationary pressures are gradually moderating and could give the Fed greater flexibility in setting monetary policy. Conversely, an upside surprise, particularly in core inflation, could challenge that narrative and put upward pressure on bond yields.
   
• Employment data points to slower job growth – U.S. private employers added an average of 8,250 jobs per week for the four weeks ending July 25, down from 11,000 in the previous report, according to ADP. The figures are consistent with other indicators pointing to moderation in hiring. Even at this slower pace, job gains may be sufficient to support near-full employment, particularly as labour-force growth also slows. The broader labour market therefore appears to be cooling but still roughly balanced, in our view. Approximately 7.4 million job openings continue to exceed the 6.9 million unemployed workers, suggesting labour demand remains relatively healthy. This should help support household incomes and consumer spending, key pillars of the broader economy. At the same time, slower hiring should help reduce wage-related inflation pressures, potentially giving the Fed more room to be patient. The timing of any move will likely depend on incoming inflation and employment data over the months ahead. We also expect the Bank of Canada to remain on hold a while longer.

Brian Therien, CFA;
Investment Strategy

^{Source for all data: FactSet.}

• Stocks mixed as oil prices jump – U.S. markets took a breather today while the TSX hit a fresh record high. With earnings season largely behind us, investors' attention has shifted to geopolitics. Efforts to secure a deal to reopen the Strait of Hormuz remain stalled, while Houthi militants claimed responsibility for an attack on a Saudi refinery near the Red Sea, lifting oil prices by more than 4% and pushing WTI crude above $80 per barrel. Meanwhile, the U.S. administration appears to be pivoting toward economic pressure rather than additional military strikes. Within the market, energy led sector performance, supported by higher oil prices, while more defensive and interest rate-sensitive sectors, including real estate, utilities, and communication services, underperformed. Elsewhere, Taiwan Semiconductor Manufacturing (TSMC), the world's largest chipmaker, reported strong July revenue growth of 44.7% year-over-year, helping reinforce continued demand for AI-related technology. However, shares of NVIDIA fell on reports that it is partnering with Wall Street firms on $500 billion in funding for the buildout of AI infrastructure.
   
• Attention turns from earnings to inflation - Corporate earnings have been front and center for markets over the past several weeks. With roughly 90% of S&P 500 companies having reported second-quarter results, earnings growth is tracking near 48%, more than double the 24% estimate at the start of earnings season and one of the strongest reporting periods outside of major post-recession rebounds. This earnings strength has been a key pillar supporting equities and helping drive major indexes to record highs. This week, however, investors’ focus is likely to shift from earnings to economic data, particularly inflation reports, as uncertainty remains around the Federal Reserve’s next move. Friday’s weaker-than-expected jobs report reduced expectations for a September rate hike, with markets now pricing in less than a 50% probability. Even so, this week’s Consumer Price Index (CPI) and Producer Price Index (PPI) reports are expected to play a larger role in shaping the outlook for monetary policy. Consensus forecasts call for headline CPI inflation to ease slightly to 3.4% in July from 3.5% in June, while core inflation is expected to slow to 2.5% from 2.6%, which would mark its lowest level since February. While uncertainty surrounding the path of monetary policy remains elevated, we continue to believe that additional rate hikes are far from inevitable, particularly if inflation continues to show gradual signs of moderation.
   
• Is buying at all-time highs a risky proposition? - Reaching an all-time high can leave investors wondering whether it is still a good time to put money to work. While pullbacks can occur at any time, history suggests that new highs have not typically been poor entry points.* Average forward three-month returns have been slightly lower when investing at an all-time high, but the gap largely disappears over six months.* Over one-, three-, and five-year horizons, average returns have actually been higher following all-time highs than when investing on a typical trading day.* In our view, the lesson is that new highs often occur because fundamentals are improving, not because a market advance is ending. As a result, time in the market has historically mattered more than waiting for a perfect entry point. In today's environment, we believe investors should avoid becoming overly concentrated in any single theme, keeping in mind their risk tolerance and investment goals.

Angelo Kourkafas, CFA;
Investment Strategy

^{Source for all data not cited: Bloomberg.  
Source for data cited: * FactSet, Edward Jones}

Friday 8/7/2026 p.m.

• Markets close higher following jobs reports – Canadian and U.S. equity markets ended higher on Friday, with the TSX and S&P 500 reaching record closing highs. The July employment reports showed stronger-than-expected job gains in Canada alongside a lower unemployment rate for both Canada and the U.S. Investors appeared to focus on the U.S. report’s softer wage and hiring trends, which may help reduce inflationary pressure and give the Fed less urgency to hike interest rates. Bond yields were mixed, with the 10-year Government of Canada yield up to 3.64% and the 10-year U.S. Treasury yield down near 4.64%. In international markets, Asia finished mixed overnight, while Europe traded higher. In energy markets, WTI oil prices edged down near $77 per barrel amid reports that Iran and Oman are nearing an agreement that could reduce disruptions in the Strait of Hormuz. The U.S. dollar was weakened modestly against major currencies, consistent with the decline in Treasury yields.
   
• U.S., Canada jobs reports mixed, unemployment edges lower – Canada employment grew by 75,000 in July, ahead of estimates for 18,000 jobs added. As a result, the unemployment rate ticked down to 6.4%, below expectations to hold steady at 6.5%. Total U.S. nonfarm payrolls declined by 23,000 in July, well below forecasts for a gain of 95,000 and the average monthly increase of 34,000 over the past 12 months. The largest contributors to the drop were local government education (-50,000), leisure and hospitality (-40,000) and retail trade (-19,000). Payroll figures for May and June were also revised lower by a combined 103,000, indicating hiring slowed more than previously reported. Despite July's job losses, the unemployment rate edged down to 4.1%, compared with expectations that it would hold steady at 4.2%, driven by a further reduction in the labour-force participation rate. Average hourly earnings increased 3.2% from a year earlier, below estimates calling for a 3.5% rise, which could help ease inflationary pressure. The broader labour market appears to be cooling but still roughly balanced, in our view. Approximately 7.4 million job openings continue to exceed the 6.9 million unemployed workers, which should help support household incomes, consumer spending and the broader economy. The report could keep the Fed on track to hike; however, there may be somewhat less urgency now, in our view, with the timing likely dependent on incoming inflation and employment data over the months ahead.
   
• Strong earnings season approaches the home stretch – With 88% of S&P 500 companies having reported earnings, results have been considerably stronger than expected. About 86% have beaten analyst estimates by an average upside surprise of 29%. As a result, forecasts for second-quarter earnings growth have been revised sharply higher to 48%, more than double the 22% estimate at the end of the quarter. Energy companies are posting the strongest growth — supported by higher oil prices during the quarter — followed by the communications and consumer discretionary Earnings gains have also been broad-based, with 10 of the 11 sectors reporting year-over-year increases. We believe wider participation could help make the market's advance more durable by reducing its reliance on a small group of mega-cap companies. It could also help create a more favourable backdrop for diversified portfolios. We continue to recommend overweight positions in U.S. large-cap stocks and emerging-market equities, which we think stand to benefit from their exposure to tech innovation and related infrastructure buildout. We expect U.S. stocks to benefit from the relative strength of the U.S. economy, supported by a steady labour market and consumer spending. We also recommend an overweight position in Canadian small- and mid-cap stocks given their meaningful exposure, in our view, to materials, industrials and energy, three sectors we view favourably.

Brian Therien, CFA;
Investment Strategy

^{Source for all data: FactSet.} 

• Stocks close mostly lower ahead of Friday's employment data – North American equity markets finished mostly lower Thursday, with the TSX and S&P 500 each posting modest declines and investors awaiting tomorrow's July employment reports for both Canada and the U.S. Geopolitical developments also remained in focus amid continued reports of progress toward an agreement that could help reopen the Strait of Hormuz, although important details surrounding its implementation remained unclear. The absence of a finalized agreement likely contributed to upward pressure on oil prices, with WTI crude rising roughly 3.6% on the day. On the economic front, U.S. initial jobless claims remained low at 199,000 last week, highlighting limited layoff activity, while second-quarter U.S. labour productivity exceeded expectations. In bond markets, the 10-year U.S. Treasury yield edged higher to around 4.66%, while the 10-year GoC yield rose to 3.62%.
   
• U.S. jobless claims remain low, signaling stable labour-market conditions – A busy week of labour-market data continued this morning, with U.S. initial jobless claims totaling 199,000 last week, little changed from the prior week’s revised reading of 198,000. In 2026, weekly jobless claims have averaged roughly 211,000, well below their 30-year average of more than 300,000 and indicative of historically low layoff activity. This morning also brought the Challenger Job-Cut Report for July, which tracks layoffs announced by U.S.-based employers. Announced job cuts fell to 33,429 in July from 45,849 in June and were 46% lower than a year earlier. The July total was also the lowest in two years. While layoffs remain limited, we've also seen decent U.S. hiring trends this year. Yesterday’s ADP employment report showed that U.S. private employers added 44,000 jobs in July, down from a revised 95,000 in June but still representing stable hiring trends, in our view. Meanwhile, the ISM manufacturing employment index rose to its highest level since August 2022 and moved into expansion territory for the first time in 33 months, perhaps signaling some improvement in manufacturing employment. However, this was partially offset by a decline in the ISM services employment index, which fell into contraction territory in July. Overall, we would characterize U.S. labour-market conditions as healthy, with low levels of layoffs paired with a moderate pace of hiring. We expect stable labour-market conditions to remain supportive of the U.S. economy and consumer spending over the remainder of the year. Labour-market data will remain in focus tomorrow with the release of the domestic labour force survey and the U.S. nonfarm payrolls report for July.
   
• U.S. labour productivity improves in the second quarter – Strong labour productivity has supported the U.S. economy in recent years. This morning’s preliminary report for the second quarter showed that nonfarm business labour productivity increased at a 1.4% annualized rate, exceeding expectations for a 0.7% gain and above the first-quarter reading of 0.8%. Since 2023, U.S. labour productivity has grown at an annualized rate of roughly 2.5%, well above the approximately 1.2% average recorded from 2010 through 2019. Stronger labour productivity can benefit the economy by allowing output to grow without a commensurate increase in labour costs, thereby helping to ease inflationary pressures. This dynamic is reflected in unit labour costs, which measure the labour compensation required to produce one unit of output. Unit labor costs increased at a 1.3% annualized rate in the second quarter, below expectations for a 2.2% increase. The relatively modest increase may provide some evidence of easing cost pressures and help reduce the urgency for additional Federal Reserve interest-rate hikes, particularly if inflation data over the next several months show a similar trend. With U.S. labour-force growth slowing, we believe sustained productivity gains could play an increasingly important role in supporting U.S. economic growth in the coming years.

Brock Weimer, CFA;
Investment Strategy

^{Source for all data: FactSet.}