Podcast
Down But Not Out
Will Simpson and Greg Wise
March 13, 2026.
What the recent market pullback means for investors.
Markets had a choppy week as investors tried to digest the geopolitical headlines and what higher oil prices might mean if they stick around. By the end of the week, most equity markets were only modestly lower despite some fairly sharp swings along the way. The S&P 500 finished down about -0.4% in CAD terms, the Dow was off roughly -0.8%, and the Nasdaq slipped just -0.1%, showing how the U.S. market largely managed to stabilize. Canada lagged a bit more, with the TSX down -1.3% for the week. International markets were mixed but generally softer, with Europe down -0.4% and EM off -0.3%. Japan was the clear outlier on the downside, falling -2.4% and standing out as the biggest detractor globally this week.
The main driver behind all of this remains the escalating conflict and the resulting spike in oil prices. Crude has moved sharply higher, and the market is increasingly accepting that tensions may persist for some time, especially given the strategic importance of the Strait of Hormuz. One of the bigger market reactions has actually been in yields, with government bond yields in Canada and Treasury yields in the US jumping roughly 35 to 40 bps across much of the curve over the past couple of weeks. Investors are clearly pricing in some potential inflation risk from higher energy prices. At the same time, Canada delivered a surprisingly weak jobs report, shedding -108k full-time jobs and unemployment jumping to 6.7%, reinforcing the idea that our economy was already slowing before the geopolitical shock.
Looking ahead, attention now turns to next week’s central bank meetings. Both the Federal Reserve and the Bank of Canada are widely expected to hold rates steady in the near term. Markets have pulled back expectations for aggressive easing, with investors now pricing far fewer cuts this year than they were just a couple of weeks ago in the US. Two weeks ago, the US futures were pricing in roughly 2.5 cuts by year end, that is now less than 1 cut. Canada actually shifted the other way, with roughly 1 more cut expected by year end than two weeks ago. Hang on, things are moving fast.
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