It was another week of volatility as hope faded and was then rekindled for a re-opening of the Strait of Hormuz. Canada fared better than most thanks to our commodities exposure and lower inflation rate. Bond markets in the US are nervous over inflation and the growing deficit. We do live in interesting times.
| Index | Close May 14th 2026 | Close May 21st 2026 |
| S&P500 | 7,506 | 7,452 |
| TSX60 | 34,268 | 34,409 |
| Canada 10 yr. Bond Yield | 3.56% | 3.55% |
| US 10 yr. Treasury Yield | 4.48% | 4.57% |
| USD/CAD | $1.37249 | $1.37774 |
| Brent Crude | $106.54 | $104.62 |
| Gold | $4,652 | $4,540 |
| Bitcoin | $81,635 | $77,507 |
Source: Trading Economics & Factset
Headline inflation in Canada rose to 2.8% from March’s 2.4% reading. The higher print was almost completely attributable to higher fuel and energy costs. The reading was lower than market expectations. If you stripped out the rise in gasoline prices, the rise was a much more modest 2%. Services inflation cooled from 2.6% in March to 1.7% in April. The Bank of Canada’s (BoC) preferred measures (median and trim) averaged 2.1% down from March’s 2.3%. Bottom line – the BoC has no reason to raise rates for now.
In the UK, the story is markedly different. Though inflation cooled from 3.3% to 2.8% in April, a lot was due to the government introducing a cap on home energy costs and changes to the vehicle excise duty. The yields on UK 30 yr. government bonds (Gilts) had jumped from 5.16 at the end of February to 5.85% on May 15th before falling back to 5.62%. The turmoil can be placed at the feet of the governing Labour Party where PM Keir Starmer is under pressure to resign. Bond traders are worried that the prospective challengers will ratchet up the deficit. One challenger, Andy Burnham, released a statement saying he would abide by the fiscal guardrails that are in place.
One week after Donald Trum travelled to Beijing to meet with Xi Jinping, Vladimir Putin made the same pilgrimage. While not groundbreaking, the contrasts between the 2 summits were obvious. Both summits were long on pomp and ceremony, but the Xi/Putin conflab delivered some concrete areas of co-operation while the Xi/Trump summit produced nothing of consequence. It should be noted that trade between Russia and China is now by-passing the US dollar and is being conducted in Yuan and Rubles. The joint statement released after the summit called for a multi-polar (as opposed to a Uni-polar) world, more trade between the 2 countries, and a ramping up of educational exchanges. There was no joint statement from the Xi/Trump meeting.
3 oil tankers carrying 6 million barrels of crude managed to exit the Strait of Hormuz this week. 1 South Korean ship and 2 from China are headed to their respective home countries. The oil on board is from Kuwait, Iraq, and Qatar. None of the shipping companies responded to questions from the press as to how the ships secured passage through the Strait. In a more surprising feat of navigation, a Cypriot flagged tanker entered the Persian Gulf through the Strait. News of the transit helped bring crude prices down – Hope springs eternal.
The United Arab Emirates says that an expansion of its pipeline that bypasses the Strait of Hormuz is 50% complete and should be operational in 2027. The expansion will increase pipeline capacity from 1.8 to 3.6 million barrels of oil per day. Prior to the closure, 21 million barrels of oil passed through the Strait every day.
Back in Canada, the Federal Government announced a strategy to double the capacity of the electric power grid in Canada by 2050. The strategy includes more generation capacity but, perhaps more importantly, a plan to connect (intertie) the existing provincial grids. Electric power comes under provincial jurisdiction, but the federal government does have some carrots (and sticks) to chivvy the process along. With the increasing demand for electric power driven by AI data centres, EVs, and heat pumps this play nicely into one of our theses on the electrification of everything.
Quantum computing has been relegated to the back pages with the fervour around AI. Canada though has not stood still on this front. In December 2025 the Federal Government launched the Canadian Quantum Champions Program investing $92MM across 4 companies, Xanadu (Toronto), Nord Quantique (Sherbrooke), Photonics (Vancouver), and Anyon Systems (Montreal). This week Photonics raised a further $275MM lifting the company’s valuation to $2.7 billion. The investors in this round included both government and the private sector.
EVs have always struggled against range anxiety and the time it takes to recharge. Chinese battery maker CATL is about to put those issues to bed. The company has unveiled 6 new battery technologies including an EV battery that has a range of 1,500 KM and a superfast charging battery that can charge from 10% capacity to 90% in less than 7 minutes. The latter is also efficient in colder climes. The charging time at -30c is only 9 minutes.
As I was writing this afternoon, I was treated to an eagle soaring outside my window. Eagles are common in Victoria, but majestic none the less. On that note we’ll leave you with this piece from ABBA… Have a great weekend
Russ Lazaruk, RIAC, CIWM, CIM, FCSI
Managing Director & Portfolio Manager
