Morning Money — Weekly Recap | Friday, October 2
THE WEEK IN ONE LINE
Cooler inflation and strong AI earnings helped stocks, but the real story was bonds: long-term yields surged to multi-decade highs, raising borrowing costs and challenging valuations across Canada and the U.S.
Why it matters to Canadians: even if central banks pause, elevated long-term yields feed directly into fixed-mortgage renewals, business loans and the value investors assign to REITs, utilities, telecoms and growth stocks.
1. THE BOND MARKET TOOK CONTROL
The U.S. 10-year Treasury yield touched 5.34%, its highest level in 24 years, after its sharpest quarterly rise since 2016. Canada’s 10-year yield climbed near 4%, close to its highest since 2023. The TSX ended Thursday at a 10-week low and broke a five-month winning streak.
Global bonds | TSX recap
2. CANADA STALLED — BUT DIDN’T BREAK
Canada’s economy was unchanged in July, matching expectations, while Statistics Canada’s early estimate points to 0.2% growth in August. That leaves third-quarter growth around the Bank of Canada’s forecast, but trade tension and weak hiring remain risks. The loonie traded near a 12-week low during the week.
Reuters
3. CANADA MADE A MASSIVE ENERGY BET
Shell and its partners approved LNG Canada’s multi-billion-dollar Phase 2 expansion in Kitimat, B.C. The project will double capacity to 28 million tonnes annually — a major long-term boost for Canadian natural-gas exports, investment and construction, with cost and emissions execution still critical.
Reuters
4. U.S. INFLATION CAME IN COOLER
August PCE inflation rose 0.3% monthly and 3.4% annually. Core PCE was softer at 0.2% monthly and 3.0% annually. That reduced the urgency for another immediate Fed hike, but real consumer spending rose a strong 0.6%, so the economy is not flashing recession.
U.S. Bureau of Economic Analysis
5. AI DEMAND IS STILL REAL
Micron delivered another blowout quarter and stronger-than-expected guidance as AI data centres drove demand for advanced memory. It disclosed roughly US$32 billion in customer supply commitments. The catch: Micron still slipped after earnings because expectations were already enormous.
6. CONSUMERS ARE PICKIER
Nike fell roughly 10% premarket Friday after warning of a steep annual revenue decline, weak demand in China and further job cuts. Strong spending at the economy-wide level is not translating into easy growth for every consumer brand.
Reuters: Friday markets
FRIDAY MORNING
• TSX futures were +0.2% at 6:25 a.m. ET.
• S&P 500 and Dow futures were about +0.5%, with Nasdaq futures near +0.7%.
• Brent crude fell back below US$100 and the U.S. 10-year yield eased toward 5.22%.
• The September U.S. payroll report is landing as this recap goes out; consensus called for roughly 90,000 new jobs and 4.1% unemployment. The wage number may matter most for the Fed.
TSX futures | Jobs preview
NEXT-WEEK OUTLOOK
• Wednesday: Federal Reserve meeting minutes — investors will look for how divided officials were on further rate hikes.
• Friday: Canada’s September jobs report — the key domestic test after August’s 41,700-job loss.
• All week: watch the U.S. 10-year yield, oil near US$100 and the loonie. If yields stabilize, beaten-up rate-sensitive Canadian stocks could get relief. If yields resume climbing, refinancing and valuation pressure will remain the dominant theme.
• Earnings season begins to build, with investors focused less on backward-looking profits and more on whether AI spending and consumer demand can stay strong into 2027.
Reuters: week ahead
