Whiplash would be the best way to describe the equity markets this week, thanks to Trump’s musings about Greenland and tensions in the Japanese bond market. Bonds followed a similar, if not quite so violent path. The big winner again was gold which reached new highs. Crypto & Bitcoin are proving themselves to be risk assets rather than storehouses of value as they have not followed the gold trajectory.
| Index | Close Jan 15th 2026 | Close Jan 22nd 2026 |
| S&P500 | 6,982 | 6,911 |
| TSX60 | 33,030 | 33,069 |
| Canada 10 yr. Bond Yield | 3.37% | 3.40% |
| US 10 yr. Treasury Yield | 4.18% | 4.25% |
| USD/CAD | $1.38945 | $1.37878 |
| Brent Crude | $63.86 | $64.35 |
| Gold | $4,611 | $4,947 |
| Bitcoin | $95,642 | $89,095 |
Source: Trading Economics & Factset
The lead story of the week was the potential showdown between the European Union and the US over the fate of Greenland. Donald Trump has been pushing for Greenland (an autonomous region of Denmark) to be turned over to the US for the past few months. The story swung between threats of military action and offers to purchase the island. Things got interesting after several European nations sent small contingents of troops to Greenland. Trump then unleashed his favourite weapon, tariffs, on the 8 countries that had participated. Europe was ready to retaliate when the TACO (Trump always chickens out) trade kicked in. Even if this spat is over, the EU / US trade agreement negotiated last year may be dead.
The other story that has filled editorial pages and blogs were the speeches by PM Mark Carney and Donald Trump in Davos. The contrast could not be starker. In his 16-minute address, Mark Carney laid out the new reality the world is now facing and the need for the nations to change and adapt. The speech was measured, direct, and concise. The next day Donald Trump took to the podium and delivered an hour + of rambling threats, grievances and complaints. The links in this paragraph will take you to the respective speeches.
While the mid-week selloff in the markets was in large part due to the fear of a major trade war, it was also a reaction to tensions in the Japanese bond market. This week PM Sanae Takaichi called a snap election to try and get a parliamentary majority. Her platform calls for more fiscal stimulus and a cut in the sales tax (8%) on food. While the move may be popular with consumers, it has the bond market on edge. Japan’s debt to GDP ratio is 237% and any reduction in government revenues will spur even more borrowing. The yield on government bonds (JGBs) rose sharply (prices down) with the 40-yr bond yield rising 29bps to 4.2%. The yield on the 40-yr JGBs was less than 1% in 2022. While Japan has escaped its deflationary spiral, the bond vigilantes are nervous. The move has put upward pressure on yields outside of Japan.
China hit its 5% GDP growth target for 2025. But it was really a story of 2 economies. The domestic economy continues to stagnate, and the real estate sector has seen a 2.2% decline in new home prices in the past year. Exports, on the other hand, are booming. Companies have aggressively switched their sales efforts to new markets to cut their reliance on the US. Forecasts are for slightly lower GDP growth in 2026.
Canada’s inflation rate (CPI) rose to 2.4% in December from a 2.2% rate in November. The headline number doesn’t tell the whole story. The rise can be largely attributed to the “base effect” Last year there was a GST holiday (December14, 2025 to February 15, 2026) that artificially lowered prices. The Bank of Canada’s preferred measures, CPI-trim & CPI-median, both declined. Markets expect the Bank to hold rates steady at current levels.
Retail has always been a tough and competitive business. This month another legend, Saks 5th Avenue (also the owner of Neiman Marcus) declared bankruptcy. The immediate cause of the demise was company’s inability to realize the synergies it had expected after acquiring Neiman Marcus. The story is also one of declining department store sales writ large. Something Canadians are very familiar with.
We’re back from Toronto, where we got to enjoy some real winter, including a “snow day” with the girls. We’ll sign off with this piece from Bruce Cockburn
Russ Lazaruk, RIAC, CIWM, CIM, FCSI
Managing Director & Portfolio Manager
