Morning Money | Monday, August 31
What matters to Canadians: A new week starts with two issues pulling in opposite directions. Canada’s economy recently posted stronger-than-expected growth, but the trade fight with the U.S. remains the bigger cloud over the outlook. Ottawa’s retaliatory tariffs on roughly $20 billion of U.S. goods are due to take effect September 8, while the threat of 50% U.S. tariffs on Canadian-made vehicles is putting fresh pressure on one of Ontario’s most important industries. There was some good news this weekend: GM workers approved a deal that includes more than $1 billion of Canadian investment and new truck production in Oshawa.
This morning: TSX futures are slightly higher as oil jumps on renewed U.S.-Iran fighting, giving Canada’s energy-heavy market some support. Brent crude is back above $90, while global stocks and bonds are under pressure as investors worry that higher energy prices could keep inflation elevated. That matters for interest rates: after a more hawkish message from the U.S. Federal Reserve on Friday, markets are again pricing a meaningful chance of another U.S. rate hike. The Canadian dollar ended last week near 72 U.S. cents.
What to watch: The Bank of Canada meets Wednesday. Economists broadly expect it to hold its policy rate at 2.25%, so the bigger question will be what it says about tariffs, inflation and whether rates may need to stay higher for longer.
