Today
The global bond selloff continues this morning, with the U.S. 10-year Treasury yield briefly pushing to 5.04%, its highest since 2007, before slipping back below 5% at the time of writing. Rising energy prices, inflation concerns and mounting government debt are all weighing on bonds, with another potential supply disruption adding to the pressure after a crude pipeline in Saudi Arabia was shut. The bond selloff extends beyond the U.S., with Japan’s 10-year yield climbing back above 3% to a fresh 30-year high, while German and Australian yields are also at multi-year highs. Stocks are also under pressure with U.S. and Canadian futures pointing to a lower open, although the declines are relatively muted compared with yesterday’s declines. Markets across Europe and Asia are also in the red. Attention now turns to tomorrow’s Fed decision, with markets expecting the Fed to raise rates for the first time since July 2023. Here at home, Canada’s first investment summit wraps up today, with Mark Carney speaking this morning and former prime minister Stephen Harper, now chair of Alberta investment manager AIMCo, expected to deliver the closing remarks.
Canada makes its pitch. If the goal is to get more money flowing into Canadian projects, the chequebooks are already opening. Brookfield and CPPIB are reportedly launching a $50 bln “Maple Fund”, with each committing up to $25 bln over five years to make large equity investments in strategic sectors and critical infrastructure. Each investment would be worth at least $5 billion and structured so that each partner holds 50 per cent of the equity, according to sources. An announcement is expected sometime today at the summit. Ottawa is also expected to outline plans today to open Canada’s four largest airports in Toronto, Vancouver, Montreal and Calgary, to more private investment, potentially including foreign capital. That adds to yesterday’s commitments from TD and Scotiabank totalling more than $250 bln, along with BCE’s plans for more than $5 bln of new AI data-centre investment in Saskatchewan. Ottawa is also trying to make those dollars easier to put to work, with faster project reviews and priority advance tax rulings for investments of $1 bln or more. The challenge has never really been a shortage of capital. Investors say Canada needs more projects with clear rules and reasonable approval timelines. With TD estimating more than $1 tln across 300-plus projects already approved or under consideration through 2035, the summit is about turning some of that potential into actual investment.
While Mark Carney spearheads the Canadian investment summit aimed at bringing more global capital to Canada, he also has other ideas in mind. With Canada heavily dependent on the U.S. for trade and relations with its largest trading partner becoming less predictable, Carney is looking to diversify. The Wall Street Journal reported that the federal government has been exploring a deeper relationship with Europe, potentially including an “associate member” arrangement with the EU. Discussions reportedly span energy, defence, critical minerals and AI, along with closer integration of supply chains and infrastructure. Carney says Canada is not seeking EU membership, but rather a closer alliance that would reduce its reliance on any one country. The relationship is already becoming more institutionalized. The European Parliament is opening an office in Ottawa, one of only nine it operates outside the EU, to facilitate closer ties between European lawmakers and Canadian MPs and senators on trade, security and the Arctic. Carney will address the European Parliament on Thursday.
Another round of who said what, this time over a possible Russia-Ukraine energy truce. The U.S. president said both sides have agreed to stop attacking each other’s energy infrastructure, but Ukrainian President Zelenskyy offered a different account. He said no agreement had been finalized and Ukraine would only halt its strikes if Russia did the same, while Moscow has yet to confirm a deal. Markets appear to be taking the announcement in stride given previous energy ceasefire talks have not materialized. However, the potential truce carries more weight now, with Ukrainian strikes knocking out Russian refining capacity just as the war in Iran disrupts Middle Eastern supply, squeezing refined-product markets from both directions. Russia is the world’s second-largest diesel exporter, while the Middle East is an even larger source. A halt to attacks could give Russian refineries some breathing room to repair, but it would do little to solve the broader supply problem as long as Middle Eastern energy routes remain disrupted.
Everyone is weighing in. Microsoft is putting its two cents into the AI race, or rather the slowdown of it. In a timely manifesto published Monday, Microsoft’s AI team laid out principles that could limit how far it pushes its most advanced models. The 15,000-word document boils down to five words: “People matter more than AI.” Models should remain under human control, should not deceive users or be given legal rights, and Microsoft says it is rejecting the race toward an all-purpose superintelligence if getting there means sacrificing safety. CEO Mustafa Suleyman stressed that development is not stopping but needs to proceed with “a little bit more caution and care.” For investors, the concern is whether slower development of powerful models could temper the seemingly insatiable demand for chips, compute, power and data centres that has helped underpin the AI trade. The debate is moving beyond Silicon Valley as well, with two world leaders offering very different approaches Monday. Mark Carney called for a global “technology stability” body to help oversee AI safety, while Trump pushed back against calls for additional guardrails or a slowdown, warning that either could risk ceding ground to China.
Technical difficulties. Anyone refreshing Statistics Canada’s website for yesterday’s CPI report had to wait a little longer than usual. The numbers arrived about 30 seconds “late” after higher-than-usual traffic caused problems with the site and forced the agency to use its Business Continuity Plan (a small victory for IT departments everywhere as it turns out those BCP drills are good for something). It is the second major data release affected by access issues in less than a month, following similar problems with 2Q GDP data. As for the numbers themselves, headline inflation held at 3% in August, matching forecasts, while prices fell -0.1% from July. Gas prices were still 22.8% higher than a year ago, but that was down from 25.7% in July. More importantly for the Bank of Canada, its preferred median and trim measures remained relatively tame at 2% and 1.9%. There are some early signs that price pressures are broadening, with 37.3% of CPI components rising at least 3%, but for now underlying inflation remains reasonably contained. The bigger question for the BoC is what comes next, and how much $100-plus oil eventually works its way through the rest of the economy.
And the winner is… Apple TV may not have the reach of streaming heavyweights Netflix, Prime Video and Disney+, but it brought home some serious hardware last night at the 78th Emmy Awards. Widow’s Bay dominated, winning 14 of its 19 nominations, including best comedy series, which may have left a few viewers asking the same question…what exactly is Widow’s Bay? Matthew Rhys also made Emmy history, winning best comedy actor for Widow’s Bay and best actor in a limited series for Netflix’s The Beast in Me, becoming the first actor to win two lead-actor awards for different shows in the same year. Apple had another good night with Pluribus, which picked up lead actress and writing honours, while HBO’s The Pitt won best drama and Noah Wyle took best actor. Canadian Michael J. Fox also received the Bob Hope Humanitarian Award, earning one of the night’s longest standing ovations. For Apple TV, a shelf full of Emmys is pretty good advertising and may help pique interest in a platform that still trails the biggest streaming services. Might be time to dust off that Apple TV password to add Widow’s Bay to the watchlist.
Diversion: Don’t take it so personal 
