Launch Pad

With the U.S. government shutdown now ended, economic data is once again being released. We got the first glimpse of how the U.S jobs market is doing, with initial jobless claims in the U.S. totaling 232,000 for the week ending Oct. 18, according to delayed data posted on the Labor Department’s website. Continuing claims rose slightly to 1.957 million from 1.947 million, while earlier weekly data were unavailable during the shutdown. Economists had been estimating claims using unadjusted state-level filings and seasonal factors, so the data wasn’t much of a surprise, coming close to estimates. The shutdown also postponed several major economic reports, including the monthly jobs report, now set for release this Thursday, though the September CPI was issued on time due to Social Security requirements. 

By the skin of his teeth. Mark Carney narrowly avoided triggering another election after his minority Liberal government passed a crucial budget vote 170–168, helped by Green Party Leader Elizabeth May’s support and several opposition absences. It won’t come cheap though, with the budget doubling the fiscal deficit. The budget outlines tens of billions in new spending on trade infrastructure, defense, and housing, while pledging a smaller public sector and accepting larger deficits due to capital investments, earlier tax cuts, and slowing growth amid U.S. and Chinese tariffs.  Short of a majority, the Liberals relied on cross-party support and strategic abstentions to survive the confidence vote. The NDP opposed the budget but declined to provoke an election. The tight result shows how fragile Carney’s minority government is, although polls indicate the Liberals would keep power in a new election. 

Analysts warn that weakening market technicals are raising the risk of a deeper correction in U.S. stocks, as the S&P 500 broke below its 50-day moving average for the first time in 139 sessions and the Nasdaq shows deteriorating internal breadth with more stocks hitting new lows than highs. With the Mag Seven losing momentum, AI-related spending drawing more scrutiny, and megacaps like Meta already down significantly, investors are shifting into defensive sectors. While fundamentals, including upcoming retail earnings and delayed economic data, could stabilize sentiment, analysts are warning that unless the market can quickly reestablish its uptrend, the current pullback risks turning into a broader decline. 

Japan’s economy contracted 1.8% annualized in Q3, its first decline in six quarters. The decline reinforces Prime Minister Sanae Takaichi’s push for a large fiscal stimulus package as private residential investment and exports weakened and consumer spending deteriorated under high living costs. While the downturn was less severe than expected, it underscores just how fragile demand is and the limits of household resilience despite inflation running above the BOJs 2% target for over three years. On the corporate side, strong capital spending suggests firms remain committed to investment, but the broader loss of momentum will likely turn up political pressure for aggressive intervention.  

It’s all a balancing act. China’s continued domestic disinflation (and in some sectors outright deflation), is impacting the global economy, creating a powerful supply-side force that could help cool inflation in the U.S. With consumer prices barely positive, producer prices falling for the 37th month in a row, fixed-asset investment plunging, and bond yields stuck near historic lows, China’s economy remains too weak to absorb its own industrial output. As a result, Chinese firms are turning outward, aggressively exporting everything from autos to solar panels, often at discounted prices, to maintain market share. Economists estimate that a 10% drop in Chinese export prices could shave U.S. producer prices by 0.1–0.2%, offering some relief for the Fed. This new export wave, which would flood the global market with cheaper goods, could however pose a threat to Japan and Germany. 

Canada’s housing market showed mixed signals in October, with national home sales falling 4.3% from a year earlier, but rising 0.9% month over month. The monthly increase is the sixth increase in seven months, as lower interest rates help bring activity back to life. Gains were led by B.C., Alberta, and Quebec, while Ontario and parts of the Prairies saw declines. New listings dipped 1.4%, and inventories remain tight in several regions, creating sellers’ markets and multiple-offer conditions, although buyers are showing some sings of fatigue. Despite a 7.2% rise in total listings year over year, overall sales levels remain historically low, keeping the recovery very fragile, according to economists. Prices also softened, with the national average down 1.1% year over year to $690,195 and CREA’s home price index down 3%, though slight month-to-month gains indicate stabilizing demand. Looking ahead, economists expect sales to gradually improve next year, supported by pent-up demand, although that will largely depend on the health of the job market. 

Youth in Canada are increasingly being targeted by investment scams, with 18- to 24-year-olds now reporting losses at the highest rate on record, beating seniors. Economic pressures, including the worst youth unemployment in 27 years outside the pandemic, rising debt, and limited job prospects, have made young adults more vulnerable to fraud. Scammers frequently use crypto schemes promoted through social media, leveraging sophisticated tactics such as fake licensing, deepfakes, and the pig butchering approach, which builds trust before scamming the victim. Authorities warn that these scams are often run internationally, making recovery difficult. The rise in these types of scams among youth reflects both the deteriorating financial situation of young Canadians and the growing sophistication and online reach of modern fraudsters. 

Gold is little changed as risk assets from equities to cryptocurrencies declined on fading expectations for U.S. interest-rate cuts and nervousness over tech earnings. Bullion briefly dipped below $4,000 an ounce, then pared losses, following a three-day drop. With investors awaiting delayed economic data after the U.S. shutdown, several Federal Reserve officials cautioned against a cut, although Governor Waller came out in favour. Interest-rate swaps now imply a less-than-50% likelihood of a December cut after all but pricing in a quarter-point move less than a month ago. Higher borrowing costs tend to weigh on gold, which doesn’t yield interest. Both gold and silver continue to feel the weight of equity-driven risk aversion, where rising volatility forces leveraged positions to be pared back. Despite the pullback, gold is up more than 50% this year, and remains on course for the best annual gain since 1979. Investors have bought the metal as a hedge against growing fiscal unease in several major economies, while elevated central-bank buying also provided crucial support for bullion’s surge to a record above $4,380 last month.