Weekly Bottom LineTD Economics

Key arguments

• Rising energy costs and a higher term premium pushed U.S. 10-year Treasury yields to 4.94%, close to a multi-decade high, with global bonds selling off in tandem.
• August U.S. inflation firmed: headline and core CPI accelerated to 0.4% and 0.3% m/m, with core goods and services both firmer, an unwelcome surprise.
• Markets lifted the implied probability of a Fed hike next week to roughly 90% from about 70%, but TD views the decision as a close call given volatile energy prices, young core acceleration and stable inflation expectations.
• New U.S.-Canada tariffs and counter-tariffs are another manifestation of policy uncertainty rather than a material addition to the estimated 0.3pp growth drag over the next year.
• Canadian household wealth rose for an eleventh consecutive quarter past $19 trillion, with lower debt-to-income and debt-service ratios supporting consumer spending resilience into Q3.
• TD considers market pricing of at least one BoC hike this year overdone, given more contained Canadian inflation, renewed trade tension and higher Canadian borrowing costs; it expects the BoC on hold.
• Higher energy costs have not been fully passed through to consumer prices, creating scope for greater pass-through if the PPI-CPI gap reflects margin compression and energy stays elevated.

Corresponding source evidence

1. Stocks Retreat as Oil Rises, Global Bond Selloff Deepens Weekly % ChangeCurrent* Week Ago 52-Week High 52-Week Low S&P 500 7663 7719 7799 6344 S&P/TSX Comp.
2. Commodity Spot Prices** Foreign Exchange Cross Rates Fixed Income Yields Stock Market Indexes September 11, 2026 Weekly Bottom Line Highlights Canada U.S. Current Target Federal Reserve (Fed Funds Rate) 3.50 - 3.75% Bank of Canada (Overnight Rate) 2.25% European Central Bank (Refi Rate) 2.65% Bank of England (Repo Rate) 3.75% Bank of Japan (Overnight Rate) 1.00% Source: Bloomberg. · 2026
3. • Canadian household wealth marked its eleventh consecutive quarterly gain, breaching the $19 trillion mark; it should support the recent resilience in consumer spending.