Stagflation Underway?

Rates left unchanged amidst global conflict

Bank of Canada and US Federal Reserve Left Rates Unchanged

Although we’ve see the prices of oil surging and price increases in Canada, The Bank of Canada this past week highlighted the weakening in our growth and exports, slowly housing market and increase in jobs. Canada has hit record breaking numbers in job losses, with the highest reported in over four years which cited over 108,000 jobs being lost. Typically, this would lean towards lowering interest rates but with oil rising and inflating risk on, we’re essentially stuck in a bubble that at some point, has to burst.

As for the US, there has been quite the gap between Canada in terms of cutting rates. Canada began cutting a bit earlier than the US last year, leaving a 1.5% differential with BoC sitting at 2.25 and US Federal Funds Rate at 3.75.

Although the US is in much better shape than Canada in terms of overall economy and specifically exports, the two still rely on each other and mainly when it comes to Canadas petroleum. Monitoring the dollar is going to be vital over the next several months as this raises concerns for the Canadian currency and potentially the overall broader market.

The biggest takeaway from this past week? Understanding our risk and remaining neutral in order to capture both ends of the trade. We were well aware we had odds to retrace upside early on in the week but understood we could easily retest downside to close off the week, specifically 6520’s.

While we were well aware of the risk beneath 6722-6738 being 6520-6522/6622-6628 retests, the market managed to hold right in the middle, leaving both ends open. I’ve made it quite clear that we are also in a decisive state, aligning with my early 2026 market theory for the next cycle (3-6 years).