It was a quiet week on the markets with equities in positive territory and bonds essentially flat with a 4-bps rise in the 10 yr. yield. My week was spent in Parksville, where the sun was out, the beaches big and beautiful, and small children ran amok. We truly are in the Dog Days of Summer.
| Index | Close Aug 7th 2025 | Close Aug 14th 2025 |
| S&P500 | 6,350 | 6,471 |
| TSX60 | 27,761 | 27,877 |
| Canada 10 yr. Bond Yield | 3.40% | 3.43% |
| US 10 yr. Treasury Yield | 4.25% | 4.29% |
| USD/CAD | $1.37450 | $1.38085 |
| Brent Crude | $66.37 | $66.84 |
| Gold | $3,395 | $3,335 |
| Bitcoin | $117,489 | $117,811 |
Source: Trading Economics & Factset
Two US inflation reports came out this week. The first, Consumer Price Index (CPI), was a bit better than expected with headline CPI up 2.7% year over year and core CPI up 3.1%. Although both readings are still above the Fed’s 2% inflation target, they were benign enough to raise hopes of a September rate cut. The second report, Producer Price Index (PPI), was not quite so benign with a 0.9% rise month over month. Headline PPI was up 3.3% YOY and core PPI up 3.7%. The PPI numbers took away some of the enthusiasm for a September rate cut. They also indicate that tariff induced inflation has not passed through to the consumer, yet.
In what can best be described as a shakedown, Nvidia and AMD have agreed to pay the US government 15% of their revenues on semiconductor (chip) sales to China. The specific chips in question are used in AI data centres. They had until this announcement been under a security restriction for sales to China. Many experts in the field are not happy with the Trump decision, but he says the chips are “old” and there is no risk. I would say the odds of China winning the AI arms race just got a lot better.
Canada’s canola farmers are in a tight spot. China has imposed a 76% tariff on our exports to that country. This just before harvest. China has accused Canada of dumping, which we have denied. This, along with the US tariffs demonstrate our vulnerability in a world where there are no “allies”, just competing interests.
Air Canada has been served strike notice by its flight attendants and is in the process of winding down operations ahead of the work stoppage. The company has put a generous pay increase on the table. However, the Union is negotiating for a change in what time is paid for. Currently Flight attendants are paid for time the plane is in the air. (Technically when the brake is released and the plane rolls back from the gate until the brake is applied at the next gate) This means they are not paid for plane prep, boarding, or disembarkation.
The wildfires burning across the Northern Hemisphere this summer were brought home to us on our trip to Parksville. Skies in and around the oceanfront had been clear and sunny for most of the week. Smoke from the Cameron Lake fire could be seen from town, but local air quality was still good. But Thursday was completely different as we woke up to thick smoke and ash from the fires on the cars. The Mt. Underwood fire remains out of control and is over 3,400 hectares. That is a larger area than the city of Victoria. Hopefully the rain, forecast for the weekend, will improve things. A big thank you to the crews battling the fires in rugged terrain and high temperatures.
We’ll leave you with this from Johnny Rivers and hope for some Summer Rain…. Enjoy
Russ Lazaruk, RIAC, CIWM, CIM, FCSI
Managing Director & Portfolio Manager
