Today
It’s Fed day, and interest rates are taking centre stage. Markets are overwhelmingly expecting a quarter-point hike, the first since 2023, which would take the policy rate to 3.75%–4.00% and could bring tensions between the U.S. administration and the Fed back to the surface. Trump spent much of last year demanding rate cuts and sparring with former Fed Chair Jerome Powell. Kevin Warsh was supposed to usher in a different approach, saying less and not poking the proverbial bear. However, with inflation concerns rising and oil back above $100 amid the conflict in the Middle East, the case for easier policy has faded (more on the Fed in Fixed Income below). North American futures are pointing to a higher open, while the U.S. 10-year Treasury yield is hovering around 5%. Across the Atlantic, European stocks are also higher, while Canada is getting its own spotlight in Brussels. European Commission President Ursula von der Leyen has proposed opening the door for Canada to become the EU’s first “associate member,” part of a push for deeper economic, technology, energy and defence ties. The details are still a work in progress, but the proposal fits with Carney’s effort to diversify Canada’s economic relationships beyond the U.S.
Carney means business. Staying on the topic of Canada, the Prime Minister used this week’s Investment Summit in Toronto to make a direct pitch to some of the world’s largest asset managers, pension plans and sovereign wealth funds. Canada needs more investment, and Ottawa is prepared to change the economics to attract it. Carney unveiled what the government is calling the “Productivity Mega Deduction,” one of the most significant changes to the tax treatment of business investment in Canada in decades. The new measure broadens the range of capital investments that Canadian businesses can immediately write off for tax purposes, extending the treatment to areas such as energy infrastructure, mining, technology and transportation. Rather than deducting those investments gradually over many years, businesses will be able to expense them immediately, lowering the after-tax cost of investing and providing an incentive to bring capital spending forward. About two thirds of business investment categories will now qualify, up from 15%, and the changes will be permanent for property acquired starting September 15. The measure is expected to cost Ottawa $36 billion over five years, but the government estimates it will generate 1.4 to three times that amount in economic activity, adding $22 billion to annual output and 80,000 jobs a year within a decade. Ottawa estimates the changes will cut Canada’s marginal effective tax rate on new business investment to 6.4% from 13%, the lowest in the G7 and less than half the U.S. rate. After years of weak capital investment and productivity growth, the message to businesses is clear. Ottawa wants them spending more, and sooner.
Canada sales pitch is getting attention. OpenAI was among the companies at the summit looking at potential Canadian investments, including data centre partnerships that could take advantage of the country’s availability of energy and land. George Osborne, OpenAI’s head of countries and former UK chancellor who appointed Carney to lead the Bank of England, called Canada a “very important market” with “lots of potential.” He also described Carney’s plan for AI adoption as one of the clearest among Western governments and said his broader medium- and long-term economic strategy was “very impressive” given the disruption to Canada’s trading relationship with the U.S. No OpenAI investment has been announced, but attracting capital intensive projects such as data centres is the type of investment Carney is trying to drum up as Canada looks to improve productivity, build out its infrastructure and reduce its economic dependence on the U.S.
In the U.S., crypto markets came under renewed pressure after the Senate blocked the Clarity Act, a regulatory bill the industry had spent years pushing through Congress. Bitcoin fell as much as 5.3% to below $75,000, while Ether dropped more than 8% and crypto-related stocks including Coinbase and Circle fell by double digits. The legislation would have created clearer rules for digital assets, including whether cryptocurrencies should be regulated as commodities or securities, while putting much of the market under the Commodity Futures Trading Commission (CFTC). Its defeat leaves that regulatory uncertainty in place and removes a potential near-term catalyst for an industry already under pressure as higher interest rates have made riskier assets such as crypto relatively less attractive. With the midterm elections less than two months away, another attempt at comprehensive legislation this year now looks more difficult.
China has introduced new regulations giving authorities greater ability to restrict overseas travel for citizens working in sensitive roles or industries. The rules formalize restrictions already applied to civil servants, Communist Party officials and employees of state-owned enterprises, while potentially extending exit bans to private sector tech executives and researchers working in sensitive areas. Violations of export controls or technology transfer rules can result in exit bans ranging from three months to indefinitely. Beijing says the measures are intended to protect national security and development interests as competition over advanced technology intensifies. Legal and immigration experts say the broad wording gives authorities considerable discretion and could discourage travel even without a formal ban. The regulations stop short of restricting overseas travel for all Chinese citizens but broaden the government’s ability to restrict travel for those considered to hold sensitive positions or information. For some, the travel door just got a little narrower.
Data released from the Canadian Real Estate Association (CREA) showed Canadian home sales edging -0.7% lower month over month in August, amid growing economic uncertainty, as the Bank of Canada warns of inflation risks and economists question the sustainability of recent economic growth. Borrowing costs are also putting pressure on the housing market as fixed mortgage rates have moved in tandem with bond yields. Also weighing is the potential of a rate hike by the BoC by year end. The central bank has held interest rates steady for seven consecutive policy meetings but must now deal with the impacts of volatile energy prices and U.S. tariffs on the Canadian economy. On a year-over-year basis, actual home sales were down -6.9% in August, while newly listed properties declined -3.3% from the previous month. Home prices were little changed from July to August, extending the longest stretch of monthly price stability since 2024. The national average home price was $668,219 in August, up 0.6% from a year ago.
If you haven’t already noticed, watching your favourite sports team is getting more complicated. With the NHL preseason starting this weekend, you may want to figure out where the games are before the puck drops. More sports are being split across traditional broadcasters and streaming platforms, and hockey fans will get a good taste of that this season. Sportsnet remains the main home for the NHL in Canada, but not every game will be available on the regular Sportsnet TV channels. Monday Night Hockey, for example, moves exclusively to Sportsnet+, meaning viewers will need access to the streaming service. For Rogers, Rogers West and Shaw Direct customers who already subscribe to Sportsnet, that comes at no additional cost. Sportsnet customers with other TV providers will need a $12.99/month add-on, while those without a TV subscription will need Sportsnet+ Standard, currently $29.99/month and rising to $34.99 on September 22. Wednesday Night Hockey, meanwhile, moves to Prime, which will also carry three early-round playoff series. Clear as mud? If you think this is just a hockey thing, think again. Basketball fans are in for a similar experience, with NBA games split across Prime, Sportsnet and TSN this season. Baseball fans already know the drill, with Jays games mainly on Sportsnet and some Friday nights exclusive to Apple TV. Following your teams will require more navigating and, surprise, potentially more subscriptions this year. Apparently, finding the game is now part of the game. Enjoy.
Diversion: Distracted driver
