Below, you will find our monthly market update and relative information that pertains to the current state of the economy.

Market Update

• All the market indices closed higher than the beginning of the month.
  • • The S&P 500 finished at 7,686.14 (+2.62%)
    • The DOW finished at 53,185.90 (+1.34%)
    • The NASDAQ finished at 26,370.89 pts (+3.93%)
    • The TSX finished at 36,270.48 pts (+2.96%)

Canada

Monetary Policy

• On September 2^nd, The Bank of Canada (“BoC”) decided to leave the overnight lending rate unchanged.
  • Currently, the overnight rate is 2.25%, the Bank Rate is at 2.50%, and the deposit rate is at 2.20%.
  • “With the economy and inflation evolving broadly as forecast in the July MPR, Governing Council agreed to leave the policy rate unchanged. However, the upside risks to inflation have increased, while new tariffs make growth prospects more uncertain. Governing Council will assess the sustainability of the economic rebound and the outlook for inflation and is prepared to adjust monetary policy as needed. The Bank is committed to maintaining Canadians’ confidence in price stability through this period of global upheaval.”
  • The next interest rate announcement for 2026 will take place on October 28^th, 2026.

Economic Data

• Canada’s inflation rate rose to 3.0% in July from 2.8% in June, driven mainly by gasoline prices which were up by 25.7% year-over-year on global supply concerns.
• Canada’s unemployment was 6.4% in August, unchanged from July. The jobless rate remains at its lowest level in two years.
  • Data from Statistics Canada revealed that Canada lost 41,700 jobs over the course of August.
• National economic output expanded at an annualized clip of 3.3% during the second quarter of 2026, according to Statistics Canada.
  • Exports were a key driver of growth over the quarter, boosted by a rebound in auto production after months of weaker output.
• Canada’s new retaliatory tariffs on approximately $28 billion of U.S. goods officially took effect on September 8, 2026, matching American levies dollar-for-dollar.

o    The countermeasures apply duties ranging from 15% to 50% on over 600 products, directly impacting sectors like steel, aluminum, dairy, and household appliances.

U.S.

Monetary Policy

• The Fed decided to leave the target range for the federal funds rate unchanged in its July meeting.
  • The target range for the federal funds rate is 3.50-3.75%.
• “The Committee decided to maintain the target range for the federal funds rate at 3-1/2 to 3-3/4 percent, in support of the Federal Reserve’s dual mandate. The Committee is continuing its policy of maintaining ample reserves in the banking system. Economic activity is expanding at a solid pace despite elevated uncertainty that owes, in part, to the conflict in the Middle East. Productivity growth and capital investment are strong. Job gains have kept pace with the workforce, and the unemployment rate has changed little. Inflation remains elevated relative to the Committee’s 2 percent goal, in part reflecting supply shocks that have driven price increases in certain sectors, including energy. The Committee will deliver price stability.”
• The next Fed meeting will take place on September 15^th & 16^th.

Economic Data

• The U.S. Federal Reserve Board’s preferred inflation metric, the personal consumption expenditures price index (PCE), climbed 3.7% year-over-year in July, mirroring June’s rate and landing above economists’ projections.
  • Core PCE, which excludes volatile food and energy costs, remained unchanged at 3.3%, indicating that inflationary pressures are proving stubborn rather than cooling down.
• U.S. employers added a stronger-than-expected 162,000 jobs in August, and the unemployment rate held steady at 4.1%, suggesting the American job market remains relatively solid.
• Following a breakdown in cross-border trade talks, U.S. and Canada suspended negotiations indefinitely. Washington subsequently implemented a 50% tariff penalty covering US$20 billion (C$28 billion) worth of Canadian exports.
  • The US will implement an outright import ban on several major Canadian product categories starting September 29, 2026, sharply escalating the ongoing trade war.

Global

• Driven by another jump in energy prices, Europe’s annual inflation rose to 3.3% in August from 2.9% in July, moving further above the European Central Bank’s (ECB) 2% target.
  • Energy prices climbed by 14.3% from a year ago amid ongoing global oil and gas price pressures, stemming from the conflict in the Middle East.
• The U.K. economy grew by 0.4% in the second quarter of 2026, nudging annual growth up to 1.2%, a touch better than economists had expected.
• China’s industrial earnings expanded by 11.2% year-over-year in July, marking the lowest growth rate of the year and a noticeable deceleration from previous months.
  • For the January-to-July period, profits maintained a solid 17.6% annual increase, though this pulled back from the 18.7% seen in the first half of the year, pointing to a loss of upward momentum.

As always if you have any questions, please feel free to reach out to us. Or, if you know someone who would like an opinion on their investments or insurance, please connect us! There is no better compliment than a referral from one of our current clients.

Yours Truly,

The Team, C.R. Smith Financial

Community, Respect, Service & Financial Integrity