Podcast
The Real Economy Supercycle -Part Two
Will Simpson and Greg Wise
September 12, 2026
The bigger forces at play in a changing world.
Friday was a strong finish, but there was still plenty of red across markets for a short week. Canadian equities were hit particularly hard, with the TSX down 2.4% as every major sector finished lower. Global equities were down roughly 0.7% on the week, while Japan managed a slight gain in Canadian-dollar terms. Energy was one of the few bright spots globally, with oil pushing back above US$100 and U.S. energy stocks actually gaining on the week.
Sticky inflation and higher energy prices are also putting pressure back on bond yields, with the U.S. 10-year pushing toward 5%. The move in yields is becoming harder to ignore and suggests markets are starting to take more seriously the possibility of interest rates staying higher.
The rate story is also getting interesting. The ECB raised rates, the Fed is now widely expected to hike next week, and the Bank of Japan is also expected to move higher. That puts several major central banks back in tightening mode at the same time, with higher energy prices adding to inflation pressure. Markets had become comfortable with the idea that the next move would be lower, so seeing that story change this quickly has been a bit of a wake-up call.
The good news is that the economy has continued to hold up reasonably well despite the higher-rate backdrop. U.S. growth remains solid, and there are still plenty of areas of strength globally, which gives central banks more room to focus on inflation rather than rushing to support growth.
That is probably the key tension heading into the fall. If growth stays firm while energy keeps inflation elevated, rates may need to stay higher for longer than markets were expecting. For now, the economy still looks healthy enough to handle it.
It’s another reminder that there are bigger forces at play behind the day-to-day market moves.
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