Volatility returned to the markets this week with both the Canadian and US markets in the red, despite a mid-week attempt to rally. Bond yields were flat while the Loonie sold off. Crypto was not a haven as Bitcoin starts to flirt with the $100,000 breakpoint.
| Index | Close Oct 30th 2025 | Close Nov 6th 2025 |
| S&P500 | 6,849 | 6,740 |
| TSX60 | 30,213 | 29,952 |
| Canada 10 yr. Bond Yield | 3.14% | 3.12% |
| US 10 yr. Treasury Yield | 4.09% | 4.09% |
| USD/CAD | $1.39855 | $1.41319 |
| Brent Crude | $64.67 | $63.45 |
| Gold | $4,018 | $3,979 |
| Bitcoin | $107,064 | $100,811 |
Source: Trading Economics & Factset
The big story in Canada was the release of Carney government’s first budget. There is a lot to digest in the budget and a lot of opinions on it (to be expected). There were few changes to personal taxes or deductions. The focus was on infrastructure, defense, and attracting more private-sector capital. The only change of note for personal taxes was the reduction in the lowest tax rate from 15% to 14.5% this year and to 14% in 2026. PWC details the personal and corporate tax changes here.
The price for all this is a higher ($78.3 billion) deficit. Most of the deficit comes from higher capital spending and defense. The “spending” is in the form of direct investments but also tax measures to encourage private sector investment. Pundits in the business community felt the government could have gone further. Let’s call this a prudent first step. Bond markets are somewhat sanguine over the deficit. Canada remains “the least dirty shirt” amongst its G-7 peers.
Budgets are also very much political documents. Under our Westminster parliamentary system, the budget needs to pass the House of Commons. The first confidence vote is expected Thursday (as I write this) and appears to have enough support to pass. There will be more votes over the next month and each will be a confidence vote in the government. It is a minority government, so there remains a possibility the government will lose a vote and force an election. (All money votes are confidence votes.)
While we can watch the process unfold in Canada without (hopefully) a lot of sturm und drang, the budget impasse in the US shows no signs of resolving itself. The government shut down is now in its 7th week and is the longest in history. The shutdown is now affecting the economy. Federal employees have been furloughed without pay. Some, such as air traffic controllers, are deemed essential and required to work without pay. The result has been workers not showing up for their shifts so they can work a second job to pay the bills. Flights are being curtailed at major airports with a mandated 10% reduction in flights.
It is not just US Federal government employees that are feeling the pinch. According to the latest Challenger Report 153,074 jobs were cut in October, the highest October total since 2003. Year to date the US businesses have shed 1.1 million jobs. Lower consumer and corporate spending are identified as main drivers of the losses. Interestingly, AI is also being cited as a cause. I am not convinced on the last point. In my readings on AI it is considered a productivity enhancer, not a replacement for workers. That time may come, but not quite yet.
According to Doanld Trump tariff is the most beautiful word in the dictionary. That may be but the US Supreme Court may not agree. A case challenging the President’s authority to invoke tariffs is being heard by the Supreme Court now. In there questioning of the government’s counsel several judges (from both side of the political divide) were sceptical of the case put forward by the government. The case against the current tariffs revolves around the Constitution which gives the power of taxation to Congress (not the Administration) and the 1977 International Emergency Economic Powers Act.
We’ll close off here. I am back home in Victoria, but my associate Samantha is travelling for the next 3ish weeks. Like me, she will be checking in remotely and publishing the Week that Was for us. This week’s song is for the travelling Colbys…. enjoy
Russ Lazaruk, RIAC, CIWM, CIM, FCSI
Managing Director & Portfolio Manager
