With all the talk of tariffs, it is easy to overlook another big story in the financial markets these days: the stock market.
Even in the face of uncertainty in trading relationships flowing from the tariff wars, investors are still optimistic that buying a stock today will yield a positive return tomorrow. Markets in the North America, for example, remain in or near record territory right now even if tariff talk dominates the investment narrative.
The upbeat investment story, which was fortified a bit more with better-than-expected job numbers last week, is also a variable the Bank of Canada will have to weigh when it makes its next interest rate decision this week.
A stronger employment picture coupled with market exuberance might be enough to cause the Central Bank to hold the line on interest rates but then there’s the tariff thing… that might be enough to trigger another cut of a quarter point.
Lower interest rates, though, might discourage savings in things like GICs which would direct even more capital to the stock market, pushing prices higher yet.
