Porcine

The loonie shed some hormones this morning, dribbling down to 70 cents US on the latest American inflation news. It found a floor thanks to higher oil prices. But the writing is on the wall. Money will get more expensive. Like, everywhere. Yes, lock in the mortgage.

The latest is a 3.7% inflation reading in the Staes. That’s miles above where the CB wants it to be and is the biggest spurt in five months, Most of the hike is because of crazy energy costs, thanks to the dumb Iran war (but Trump is trying to blame Ukraine).

Americans now face $4.50 (per gal) gas, $6.20 diesel and 7.5% mortgages. The trade war and tariffs are also feeding prices, plus the AI spending/borrowing boom. Meanwhile federal debt is soaring past $40 trillion and the bond market has been having a cow. A herd, actually.

The loonie reacts as US rate pressure mounts

The yield on 30-year Treasuries immediately jumped to 5.6% with the 10-year note not far behind. Bond prices have fallen as investors demand a premium for holding government debt, which is being battered by inflation expectations, soaring deficits and crowding out by massive AI infrastructure borrowing.

It would have been hard for the Trumpers to screw things up more than this. The crazy plan to buy Russian diesel, end anti-Putin sanctions and give that country billions in US taxpayer money to fuel its war machine in Ukraine is a great example. Along with the Iran debacle (more attacks on the Saudis last night), the American president is rapidly destabilizing the world.

So energy costs go up. Inflation rises. Bond yields react. Central banks raise interest rates. And your mortgage swells.

The news this morning immediately changed expectations for interest rates.

Ten minutes prior, almost 80% odds were given for a rate hold by the Fed this month. Ten minutes later that had been halved. In fact over 90% of the market now thinks American rates will go up between a quarter and a half point by Christmas, after that hike last month.

Our guys at the Bank of Canada will have a hard time resisting. The higher US rates go the more money flows in that direction (to earn a better return) which reduces the value of our dollar. A loonie at, say, 68 cents make all our imports more expensive, which is inflationary – leading to a rate increase by the CB.

See what I mean? This is an inescapable circle of events set in motion by the White House – its tariffs, its trade war, its ill treatment of allies and partners and its disastrous, impetuous attack on Iran, leading to a global energy crisis.

Already we’re see the results in Canada. Layoffs at Stelco. The Chrysler plant in Brampton for sale. EV battery production halted. Sixty-eight thousand jobs lost last month. Forty grand lost the month before. The lowest house sales in Vancouver in a quarter century. A 30% drop in the value of detached homes in Toronto and its sprawling satellite cities and towns. And, yes, the rise of traitors and secessionists in our very midst.

There’s not much lipstick we can throw on this porker. She’s fugly.

Interest rates are headed higher, even in Canada, despite the lousy recent jobs data. Already there’s a meaningful gap with the US. As it grows, we grow a new set of issues. The coming midterm elections will likely whack Republicans and remove their lock on Washington – but that could just make Trump more extreme, and the possibility exists he will call the results fake (and create a constitutional crisis). The odds of getting a new tariff-busting deal with America look to be about zero between now and 2029.

Will this result in a recession?

If the Iran and Ukraine wars don’t end soon, if oil doesn’t return to $60 a barrel and if interest rates and bond yields don’t start reversing, then – yeah – it’s likely. Even probable.

You know the best defences.

Stay employed. Your boss is your best friend for the net few years. This is no time to quit and roll the dice

Stay invested. Corporate profits are surging despite the turmoil around us and AI spending is unstoppable.

Stay diversified. In a time like this you have no idea what assets may surge or wither or what parts of the world will see money migrate to.

Stay stable. Lock in borrowing costs if you can, reduce debt if possible. Do a budget. Write a plan. Get an advisor if you need help.

Stay calm. Worse has happened. The noise will pass. Trump will end. AI probably won’t kill us. Canada will survive. We will continue to be among the most favoured and blessed people on the planet.

If you have doubts, if you lose your way, just ask your dog what matters.

About the picture: “Here is Tilly, she is a three year old Yorkie, and queen of the subdivision,” writes the posters known as Ordinary Blog Dog. “You have featured her before, but another picture reminded me of this one. She likes to sleep in sometimes, snuggled into her blankets. Late ballgames tire her out, her favorite team is the Los Angeles Doggers.”

To be in touch or send a picture of your beast, email to ‘garth@garth.ca’.

Source: https://www.greaterfool.ca/2026/10/14/porcine/