It was a mixed week on the markets. Equities were mildly positive in both the US and Canada. 10-year bond yields in the US were flat over the week while Canada’s 10-yr yield jumped. The Canadian dollar strengthened while the standout of the week was Bitcoin which hit all time highs again and is flirting with $100,000.
| Index | Close Nov. 14th 2024 | Close Nov. 21st 2024 |
| S&P500 | 5,947 | 5,948 |
| TSX60 | 25,050 | 25,391 |
| Canada 10 yr. Bond Yield | 3.31% | 3.50% |
| US 10 yr. Treasury Yield | 4.46% | 4.43% |
| USD/CAD | $1.40348 | $1.39472 |
| Brent Crude | $72.50 | $74.31 |
| Gold | $2,568 | $2,670 |
| Bitcoin | $87,256 | $98,252 |
Source: Trading Economics & Factset
Canada’s inflation rate ticked up a bit to 2% in October from September’s reading of 1.6%. Expectations had been for 1.9%. Core inflation was also up to 2.55% up from 2.35%. The upshot is that the Bank of Canada may not cut rates quite as aggressively. Traders are adjusting their bets to a 25-bps cut in December. Employment & GDP numbers will determine how aggressive the Bank will be.
Inflation in the UK also ticked up, to 2.3% in this case. This is above the Bank of England’s 2% target, putting future rate cuts in jeopardy. The UK is struggling with an economy that shrunk in September and posted a meagre 0.1% growth in GDP for the 3rd quarter. Nobody said a central banker’s job was easy.
In a speech given to the business leaders in Dallas last week, Federal Reserve Chair Jerome Powell said the Fed would not be in a hurry to lower rates further. He cited still sticky inflation and strong employment. Market Strategist & Economist Ed Yardeni posited in a recent piece that inflation may not drop to 2% and has reached its low for this cycle.
The falling interest rates in Canada have had a positive effect on the real estate market. Canadian home sales rose 30% year over year in October. The rise was spread across the country with Toronto and the BC Lower Mainland leading the pack. The national average selling price was $696,166.
Equity markets were marking time for part of the week, waiting for chip maker Nvidia’s results. NVDA posted strong earnings but its forward projections, though robust, disappointed some investors. The stock sold off 2% post results. Buy on mystery, sell on history.
Geopolitical tensions rose this week after US President Biden allowed the use of US supplied ATACMS long range missiles to hit targets inside Russia. The move was in part a response of North Korean troops entering the fray against Ukraine. Ukrainian forces wasted no time and launched a strike against Russian ammunition depots. Russia has responded by re-working their nuclear doctrine (yawn) and by launching a medium range ballistic missile against Dnipro. We may be in an endgame here and both sides are maneuvering for the best negotiating position after Trump is inaugurated.
The other maneuvering for position once Donald Trump assumes the presidency is between Canada and Mexico. The USMCA (NAFTA) free trade agreement will be up for renewal in 2026. Canadian Premiers are now calling for a re-negotiated deal with the US that excludes Mexico. The Federal government appears to be onside as well. The issue at play is Chinese manufacturers using Mexico to bypass US tariffs. The flip side is that it allows US trade negotiators to divide and conquer. It’s going to be a long 4 years.
Some of Canada’s wealthiest families are stepping up to help fight climate change. The commitments of $405 million will go through the Climate Champions initiative co-ordinated by the Clean Economy Fund. The lead donors, The Trottier Family Foundation and the Peter Gilgan Foundation gave a combine $250 million. According to the Executive Director of the Trottier Family Foundation, Eric St-Pierre, the ask of other philanthropic families has been well received.
We’ll close of here with this piece from Judy Collins, dedicated to those that have been chosen for Donald Trump’s cabinet…. Enjoy.
Russ Lazaruk, RIAC, CIWM, CIM, FCSI
Managing Director & Portfolio Manager
