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December 4, 2025
  
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Today


Equities are moving higher this morning as optimism grows around a potential Fed interest rate cut in December, with markets pricing in an 87% chance of a cut. Investors are now parsing through the latest U.S. jobs data for insights into the health of the economy. Layoff announcements in the U.S. fell to 71K in November after a surprise rise in October. Despite the decline, the total was still the highest for any November since 2022 and up 24% from a year earlier, with layoff levels remaining elevated. Hiring plans are weak, now down 35% from 2024 and at their lowest year-to-date level since 2010. On the bright side, unemployment claims fell, declining to 191,000 in the week ending Nov. 29, the lowest level since 2022. The drop of 27,000 claims came in below economists’ expectations of 220,000, though the data can be volatile around holidays like Thanksgiving, leaving many to believe that the labour market continues to cool.

Opposite Effect. Trump’s new tariffs, which were intended to reshore U.S. manufacturing jobs, are not living up to their promise. Instead, the tariffs have raised concerns that higher import costs will lead companies to cut staff, with ISM survey respondents across industries reporting plans for layoffs, offshoring, and reduced investment as manufacturing activity contracts and employment gauges fall to multi-month lows. Executives say tariff-driven uncertainty is creating a tougher environment, while some energy and industrial firms anticipate major head-count reductions next year as cash flow weakens. Although broader economic indicators like Q3 GDP and recent payrolls data remain relatively solid, organizations, including the OECD and Fed, note that the full impact of tariffs has not yet been felt, and early signs (including declining imports, elevated costs, and cautious corporate commentary) suggest rising risks for the labour market next year. 

Labour productivity in Canada rose 0.9% in Q3, the strongest gain since late last year, as business output rebounded and hours worked moved slightly lower. The latest numbers partly reversed the hit from U.S. trade tensions earlier this year, with the increase beating economists’ expectations. Gains were led by manufacturing and oil and gas extraction, with productivity improving in more than half of all industries. Still, the broader trend remains weak, with productivity essentially flat since 2021 and growing only 0.6% per year over the past decade, far below the U.S. On the bright side, recent GDP revisions have helped improved historical productivity estimates, suggesting the backdrop wasn’t as bad as previously thought. 

China is expected to maintain its annual economic growth target at around 5% next year, a level that will require continued fiscal and monetary stimulus as the country works to counter deflation, weak consumer demand, and the effects of its continued property slump. Government advisers argue that keeping the target steady would help launch China’s new five-year plan on solid footing, though some have suggested lowering the target slightly to 4.5–5%. Policymakers are likely to keep a high budget deficit ratio of roughly 4% and use early bond issuance, additional rate cuts, and extended consumer subsidies. While restructuring the economy and boosting household consumption remains front and center, those changes will take time, leaving near-term growth dependent on stimulus. 

Pandemic hangover easing. The Fed has begun to reverse its pandemic-era losses, with data showing its deferred asset (an accounting measure of accumulated losses) is shrinking, signaling that the central bank is earning enough income to slowly offset past shortfalls. The losses, which stemmed from the Fed’s massive pandemic bond-buying program and the subsequent rise in interest rates, created a mismatch between the low yield on its holdings and the high interest it had to pay banks to maintain policy rates. With recent rate cuts reducing those payments and market yields rising above the rate the Fed pays on reserves, analysts say the central bank has likely ended its negative carry. While it may still take a few more years to fully dig themselves out, economists estimate the Fed could post over $2 billion in profits this quarter. 

Home sales still an issue. Toronto home prices fell again in November, slipping 0.4% to $971,100 as slow demand and increased listings continued to weigh on the market. New listings outpaced sales by more than two-to-one, leaving inventory nearly 17% higher than a year earlier, while overall sales dropped almost 16%. The west coast appears to be in the same spot, with Greater Vancouver on track for its slowest housing market in 25 years, with just 1,846 homes sold in November and only 22,263 sales so far in 2025, likely falling below the previous low set in 2018. Prices in Greater Vancouver have held relatively flat, with detached homes averaging $2.02 million and condos just under $800,000. The slowdown reflects economic uncertainty tied to stalled efforts to reverse U.S. tariffs which has discouraged major investments, including home purchases. Although many households hope to benefit from lower borrowing costs and prices, potential buyers appear afraid to jump into the market, concerned about their employment and the overall state of the economy. 

Trashed panda. Virginia liquour store employees were shocked when they came in to work on Saturday that somebody had broken into the store. They found shattered whiskey bottles strewn across the shop floor, shards of glass soaking in puddles of booze and an unlikely suspect: an intoxicated raccoon, splayed on its stomach in the bathroom. An officer who works at the local animal control in Ashland, Va., determined the U.S. Thanksgiving break-in was not the work of a human, said after falling through the ceiling, the racoon had himself a little party and drank itself silly, knocking bottles off the shelves before stumbling into a toilet stall and passing out. It was later released into the wild after sobering up. 


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Company news


EQB Inc. is buying the banking division of Loblaw Cos, President’s Choice Bank, along with some related insurance businesses, for about $800 mln. The deal will give Loblaw, a retailer controlled by Canada’s billionaire Weston family, a stake of at least 17% in EQB. EQB CEO Chadwick Westlake said the transaction is meant to create a “scaled challenger” to Canada’s Big Six banks. PC Financial has more than 2 mln Mastercard accounts, giving his firm an entrance into the credit-card space, and PC Optimum is a dominant retail loyalty program with more than 17 mln members. The deal will combine the two firms’ digital platforms, he said, but it will also bring EQB to physical stores for the first time — there are PC Financial kiosks in more than 180 Loblaw locations.

TD Bank beat estimates on record results at its capital-markets unit, continuing a trend seen across other Canadian lenders to wrap up a year marked by buoyant markets, and the company’s U.S. business also did better than forecast.   Earlier in the year, TD kicked off a restructuring program aimed at cutting its workforce by about 2%. It recorded an additional $190 million in costs related to that effort in the fourth quarter and said the program is poised to generate $750 million in yearly savings. Provisions for credit losses totaled $982 mln in the quarter across the bank, less than the $1.11 bln average forecast. TD announced an increase to its quarterly dividend, boosting it by 3 cents to $1.08 a share. 

Bank of Montreal beat estimates on stronger-than-expected performance at its U.S. division, a business that’s been recently revamped to include wealth management operations, and the capital-markets unit also beat expectations. BMO reorganized its U.S. division earlier this year, tapping Aron Levine from Bank of America Corp. to run a combined unit that includes its personal and business banking, commercial banking and wealth-management operations. The bank also struck a deal in October to sell 138 branches in 11 states to First-Citizens Bank & Trust Co. BMO’s provisions for credit losses totaled C$755 million, less than the C$811 million average forecast, and also announced a 2% increase to its dividend.  

CIBC also topped consensus earnings on strong results in its capital-markets business and Canadian and U.S. commercial-banking and wealth-management units. CIBC has topped analysts’ estimates for more than two years straight, exceeding adjusted earnings-per-share forecasts in every period since the fourth quarter of 2023 and winning a reputation for posting “clean” results with few surprises. Companywide, provisions for credit losses totaled C$605 million, more than the C$550 million average forecast. The trend is your friend, CIBC also announced an increase to its quarterly dividend by 10 cents to C$1.07 a share.   

Salesforce Inc. gave an outlook for revenue in the current period that topped analysts’ estimates, suggesting the software company is persuading customers to buy its AI tools. The revenue forecast includes 3% of growth from Informatica, a data integration software maker that Salesforce acquired last month in an $8 bln deal. The outlook for current remaining performance obligations includes 4 percentage points from Informatica. The largest maker of software to track customer relationships is trying to push adoption of Agentforce — its AI tool that can complete tasks such as sales development and customer service without human supervision. Agentforce launched last year, and the company said it has closed more than 9,500 paid deals since then, an increase from 6,000 in the prior quarter.  


Commodities


Oil prices slightly higher as investors weighed a murky outlook for a ceasefire in Ukraine and escalating tensions between the U.S. and Venezuela. President Trump said a meeting between his envoy and President Putin was “reasonably good” but acknowledged the outcome for a peace deal was uncertain. Separately, Trump reiterated the U.S. will start striking drug cartels on land in Venezuela very soon. American forces have been massing in the region, with the situation adding some risk premium to oil prices, partially offsetting concerns around a surplus that’s expected to swell to a record next year. Despite all the geopolitical tensions, oil remains on track for an annual loss as OPEC+ brings back idled output and other producers boost supply. Earlier this year, Chinese buying helped to prop up the market, but Hengli Petrochemical International Pte. Chief Executive Officer Janet Hong sees the nation’s demand subdued until at least mid-2026.

Silver is pulling back from a record high, as traders took profits and a key measure of the U.S. dollar’s strength steadied. Silver had risen for eight straight days through Wednesday, pushing the market into overbought territory, supported by speculative wagers linked to supply tightness and expectations for lower U.S. interest rates. Though silver has been very volatile in recent days, the metal is surging and has roughly doubled in value this year, outperforming a 60% rise in gold. Both are on track for their best annual performances since 1979. A historic silver squeeze in October fueled record flows of the metal into London, which then led to tightness elsewhere. Also helping boost prices, inventories linked to Shanghai Futures Exchange warehouses recently fell to their lowest in a decade. 




Fixed income and economics


Long term bond investors are back in Japan, as the latest 30-year bond sale showed the strongest demand since 2019 suggesting that investors are finally stepping back in due to higher yields, bringing some relief to a market that’s bracing for an interest-rate hike. The 30-year yield dropped three basis points to 3.39% after the bid-to-cover ratio at the Ministry of Finance’s offering jumped to 4.04, higher than that at the previous auction and comfortably above the average for the past year. Today’s sale comes on the heels of a solid 10-year auction on Tuesday, where buyers emerged as yields reached appealing levels. Together, the results offer some relief after a sharp selloff in recent weeks driven by rising expectations for a Bank of Japan rate hike and renewed fiscal concerns, which pushed yields across the curve to multi-decade highs.

Treasuries are higher after fresh data showing weakness in the U.S. labor market supported wagers that the Federal Reserve will deliver a third straight interest-rate cut at its final meeting of the year on December 10. The 10-year yield closed at 4.06%, the lowest level of the week, as the ADP Research report showed employers shed jobs in November. The ADP data showed private-sector payrolls decreased by 32,000, marking the fourth decline in the last six months. The ADP figures took on added importance during the record government shutdown in the absence of official data. The weak labour numbers adds to momentum going into the Fed meeting next week. Bets in the rate markets are building that a new Fed chair and the release of delayed economic data will support President Donald Trump’s call to further bring down rates. Trump has said he’ll name Jerome Powell’s replacement early next year, referring to White House National Economic Council Director Kevin Hassett as a “potential Fed chair.” 


Chart of the day

 

Markets


Quote of the day

 

If you don’t like the road you’re walking, start paving another one.

Dolly Parton

Contributors: A. Innis, A. Nguyen, P. Kwon

Charts are sourced to Bloomberg unless otherwise noted.

The opinions expressed in this report are the opinions of the author and readers should not assume they reflect the opinions or recommendations of Richardson Wealth Limited or its affiliates. Assumptions, opinions and estimates constitute the author’s judgment as of the date of this material and are subject to change without notice. We do not warrant the completeness or accuracy of this material, and it should not be relied upon as such. Before acting on any recommendation, you should consider whether it is suitable for your particular circumstances and, if necessary, seek professional advice. Past performance is not indicative of future results. Richardson Wealth Limited is a subsidiary of iA Financial Corporation Inc. and is not affiliated with James Richardson & Sons, Limited. Richardson Wealth is a trade-mark of James Richardson & Sons, Limited and Richardson Wealth Limited is a licensed user of the mark. Richardson Wealth Limited, Member Canadian Investor Protection Fund.

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