Sanguine, relieved, or exuberant? I’ll opt for sanguine as the markets’ mood right now. Whether it is justified is another matter, but we will take the positive performance. Equity and bond markets both put in good numbers this week. Oil retraced its price run up and is back below $70 per barrel. Gold is drifting a bit, and the US dollar is weaker against both the Loonie and Euro.
| Index | Close June 19th 2025 | Close June 26th 2025 |
| S&P500 | 5,925 | 6,141 |
| TSX60 | 26,506 | 26,752 |
| Canada 10 yr. Bond Yield | 3.33% | 3.34% |
| US 10 yr. Treasury Yield | 4.30% | 4.25% |
| USD/CAD | $1.36971 | $1.36336 |
| Brent Crude | $77.24 | $67.84 |
| Gold | $3,369 | $3,330 |
| Bitcoin | $104,433 | $107,906 |
Source: Trading Economics & Factset
Inflation in Canada was stable last month with headline CPI at 1.7%. Core inflation was 2.6%, while the Bank of Canada’s preferred measure core trim ticked down to 3%. Housing inflation is slowing down as rent increases slow down or in some cases reverse which is a direct result of slower population growth.
US Federal Reserve Chair Jerome Powell was on Capitol Hill this week testifying before Congress. The main take away was that he is in no rush to cut interest rates further, preferring a wait and see approach to the evolving economy. The voices calling for more aggressive cuts are getting louder, but markets continue to price in just 2 more cuts this year.
The loudest voice for rate cuts has been (surprise!!) Donald Trump. Trump’s antipathy to Powell is long running and well known. He has now proposed naming Powell’s replacement early in an attempt to undermine the independence of the Fed. This news rattled currency markets, weakening the US dollar.
The “Big Beautiful” budget bill is hung up in the US Senate. Opposition to the Bill is coming from both Democrats and Republicans. The Republican opposition comes from 2 factions, the first calling for more cuts as the US deficit ballons. The second faction are looking at the polls and see their seats in jeopardy. Cuts to Medicaid are not popular amongst the electorate. According to the non-partisan Congressional Budget Office the Bill will cost the poorest households $1,600 per year but be a net benefit to the wealthiest households of $12,000 per year.
Shifting back home to Canada, Parliament has now passed Bill C-5. The omnibus bill is designed to improve labour mobility and internal free trade. It is also (and this is where it becomes controversial) designed to fast-track projects that are deemed to be in the national interest. First Nations leaders are upset on the lack of consultation before the bill was introduced. They are also worried that their rights to free, prior, and informed consent on projects that impact their communities and traditional territories may not be respected.
Defence spending is going up…. A lot. This week NATO agreed that the new spending targets will be 5% of GDP up from the current 2%. The 5% number is broken down into 2 categories. The first (3.5% of GDP) is core defence spending, essentially on the armed forces. The second category is on supporting infrastructure, which could be open to interpretation. Things that could be included are critical minerals projects, ports, cyber-security & intelligence. While part of the reason for the hike is to appease Donald Trump, the other and more important one is that the threat environment has changed.
In corporate news, Tesla has launched a fleet of robotaxis in Austin Texas. The launch didn’t go well with numerous reports of erratic driving. For now, Waymo, owned by Google parent Alphabet, is the leader in this space. I wouldn’t count Tesla out. They have a history of too early launches only to come back with a much-improved product/service.
Meta (Facebook) won a landmark court case this week. The case revolved around the use of copyrighted material to train Meta’s AI models. The suit against Meta was launched by 13 authors. The judge ruled that the plaintiffs had not demonstrated that they had been harmed by Meta’s use of their works. He did not close the door to future lawsuits where harm can be shown.
It is a typical Juneuary day here in Victoria – a bit cool and rain. Not to fret, sunshine and balmy days are on their way. In the meantime, I’ll leave you with this from Johnny Rivers…. Enjoy.
Russ Lazaruk, RIAC, CIWM, CIM, FCSI
Managing Director & Portfolio Manager
