Today
Something to be thankful for. Equities are rebounding this morning with tech shares leading the way after two consecutive days of losses, helped by easing geopolitical tensions and renewed optimism surrounding AI. TSX and S&P 500 futures are up roughly 0.4% while Nasdaq futures gained 0.8%. Semiconductor stocks recovered following yesterday’s selloff, which saw the Nasdaq decline more than -1% amid concerns about OpenAI’s revenue growth and the sustainability of AI investment. Meanwhile, Brent crude retreated toward $103 per barrel after Trump indicated the U.S. would not attack Iran before the November midterm elections, easing some supply concerns, although the 10-year Treasury yield remained elevated near 5.25%. With earnings season kicking off, we are likely to hear a lot more about the impact of higher energy costs, with Delta Air Lines the latest company to cut its full-year earnings outlook.
Something not to be thankful for. The labour market in Canada took a hit in September, with employment falling by 68,300 jobs against expectations for a 10,000-job increase, pushing the unemployment rate to 6.5% from 6.4% in August. The decline was driven mostly by a loss of 70,000 public sector positions, including reductions in education, health care, and social assistance, while manufacturing employment also fell. Employment has now declined by 110,000 over the past two months and by 41,000 since last December, highlighting economic weakness amid escalating trade tensions with the U.S. Labour force participation also fell to 64.8%, its lowest level since 1997 (excluding the pandemic), while annual wage growth for permanent employees edged higher to 2.3% from 2%. The disappointing employment figures complicate the BoC’s policy outlook, as weakening labour market conditions would typically favour monetary easing, but elevated energy prices and inflation risks have policymakers considering further rate increases.
Germany more than doubled its 2026 economic growth forecast to 1.3% from 0.5%, marking its strongest projected expansion since 2017. The sudden burst of optimism comes as resilient manufacturing activity, strong exports, and increased government spending help offset weak domestic demand and elevated energy prices. Officials also raised their 2027 growth outlook to 1.1% from 0.9%, although expansion is expected to slow to 0.6% in 2028. Germany’s debt-financed investments in infrastructure and defense are expected to provide support going forward, although private consumption remains under pressure by inflation and business investment is recovering only slightly. Despite the improved near-term outlook, there are some expected challenges ahead, including U.S. trade barriers, growing Chinese competition, high labour costs, and delays in implementing economic reforms.
Mortgage rates in the U.S. rose for a seventh consecutive week, marking their longest stretch of increases in three years and adding pressure to an already struggling housing market. According to Freddie Mac, the average 30-year fixed mortgage rate climbed to 7.4% from 7.28% last week, reaching its highest level since November 2023 and well above the 6.3% recorded last year. Elevated borrowing costs, combined with home prices near historic highs, rising property taxes, and increasing insurance premiums, have pushed housing affordability close to its weakest level since the GFC. Zillow estimates that monthly mortgage payments on a typical home were 6.7% higher in September than a year earlier, with the recent increase in rates adding another $172 per month to financing costs on a $500,000 property with a 20% down payment. As affordability declines, more borrowers are turning to adjustable-rate mortgages, which typically offer lower initial rates, with their share of mortgage rate locks reaching 12.2% in early October, the highest in four years.
Rising U.S. Treasury yields are weighing on equity markets, with small-cap stocks experiencing the greatest pressure as investors reassess the outlook for interest rates and economic growth. After outperforming for much of 2026, the Russell 2000 has fallen -9% from its mid-August highs, approaching correction territory as the increase in bond yields raises borrowing costs and compresses valuations. The selloff in the Russell 2000 is pushing against the idea that equities have remained unaffected by higher rates, showing weaknesses in financially vulnerable companies, especially indebted small-cap businesses that depend on affordable financing to remain operational. Although the Fed has signaled support for additional rate hikes, uncertainty remains over whether the tightening cycle will be modest or aggressive.
Canadian poet, essayist, and classical scholar Anne Carson has been awarded the 2026 Nobel Prize in Literature, recognizing her innovative approach to blending ancient Greek literature with contemporary poetry. The Toronto-born writer will receive approximately $1.2 mln USD, with the Nobel Foundation praising her works which include Autobiography of Red, Nox and Wrong Norma. Carson, who has taught at McGill and Princeton, is not the only Canadian making headlines, as Winnipeg-born former NFL offensive lineman John Urschel recently solved a decades-old mathematical conjecture with assistance from OpenAI models. Urschel, who retired from the Baltimore Ravens in 2017 to pursue a doctorate at MIT and is now an assistant professor, published a paper titled On the Growth Factor of Random Matrices, addressing a mathematical problem that had remained unresolved since the 1990s. The breakthrough highlights the growing role of AI in mathematical research, although the precise extent of OpenAI’s contribution to the proof remains unclear.
Diversion:
Least excited person on a Jumbotron
