Market News: Week Ending March 20, 2026

Market News– Week Ending March 20, 2026

The Canada Mortgage and Housing Corporation announced that housing starts gained 4.5% to 250,900 units (seasonally adjusted annual rate) in February. This is up from January’s revised 240,148-unit level (originally reported as 236,892). The CMHC’s six-month trend level (which tends to smooth the results) was 256,005 in this report, up 0.4% from January. Given the dramatic shortfall in housing availability, these statistics are taking on greater importance. With the market looking for a larger monthly gain, these results are weaker than consensus expectations. Activity in the housing market has a significant "ripple" effect on the broader economy.

Statistics Canada reported that the consumer price index rose 0.1% (seasonally adjusted) in February. On a year-over-year basis, the CPI was up 1.8%, a deceleration from the 2.3% pace posted in January. This move in the annual pace was due almost entirely to the end of the GST “break” and its influence on the year-over-year data. Six of the eight main CPI subgroups moved higher during the month. Transportation reported the largest monthly advance (0.6%). Household operations reported the largest (-0.6%) of three declines in February. The three Bank of Canada core inflation measures eased lower over the month. They ranged from 2.3% to 2.4%. CPI common, which the central bank says is most closely correlated with the output gap moved lower from 2.7% to 2.4% in this report. The easing of inflationary pressures reflects a softening of the broader economy. Combined with the dramatic weakening of the labour market in February, it may be sufficient rationale for the Bank of Canada to lower interest rates at its pending policy meeting, scheduled for March 18.

The U.S. Federal Reserve announced that industrial production rose 0.2% in February, following a 0.7% advance in January. On a year-over-year basis, industrial production was reported to have been up 1.4%. At the same time, capacity utilization for total industry stood at 76.3% February, the same level reported in both January and February of 2025. These results are in line with the market consensus and show modest improvements across the industrial sector.

The Bank of Canada announced that it was holding administered interest rates steady at the conclusion of its latest monetary policy meeting. The announcement leaves the target range for overnight borrowing at 2.25% to 2.50% with the official, benchmark Bank Rate at 2.50%. The Bank also maintained the official Deposit Rate at 2.20%. This is the third consecutive “on hold” announcement and leaves administered interest rates at their lowest level since July 12, 2022. Rate cuts between June 2024 and October 2025 resulted in a total reduction of 275 basis points (a basis point is 1/100th of one per cent). The Bank statement highlighted the recent weakness in the job market and broader economy. “Recent data suggest that near-term economic growth will be weaker than anticipated in January. The labour market remains soft. Employment gains in the fourth quarter of 2025 were largely reversed in the first two months of 2026, and the unemployment rate rose to 6.7% in February.” However, considerable uncertainty remains with respect to energy prices and international trade, and the press release stated that the “inflation risks have gone up”. The market will likely remain cautious in setting its expectations for the next policy announcement scheduled for April 29, 2026.

Following its two-day monetary policy meeting, the U.S. Federal Reserve (Fed) held interest rates steady, leaving the target for the federal funds rate in the rage of 3.50% to 3.75%. This is the second “on hold” result following six interest rate cuts during the current easing cycle. Administered rates remain at their lowest level since November 1, 2022, following a total reduction of 175 basis points (a basis point is 1/100th of one per cent). This easing of monetary policy follows cumulative rate hikes totalling 525 basis points between March 16, 2022, and July 26, 2023, which was the most aggressive tightening since the 1977 to 1980 period. Importantly, the Fed statement contained the text “Job gains have remained low, and the unemployment rate has been little changed in recent months. Inflation remains somewhat elevated.” This suggests that the Fed is more focused on inflation than on employment at this juncture. The Fed’s inflation target is 2.0% and annual growth of the consumer price index stood at 2.4% in February. The “no move” result was the anticipated outcome, and the market will now begin evaluating the most likely scenario for the next policy meeting, scheduled for April 28 and 29.

The U.S. Department of Labor announced that initial jobless claims totalled 205,000 (seasonally adjusted) in the week ending March 14, a decrease of 8,000 from the previous week's unrevised level of 213,000. The 4-week moving average was 210,750, a decrease of 750 from the previous week's revised average. The previous week's average was revised down by 500 from 212,000 to 211,500. These results are marginally stronger than market estimates.

Statistics Canada reported that retail sales rose 1.1% (seasonally adjusted) in January after falling 0.4% in December. January sales were stronger in six of nine main subsectors, with General Merchandise (+3.0%) reporting the largest advance. Clothing (-1.1%) reported the largest monthly decline. On a year over year basis, overall sales were up 1.5%. The monthly advance was smaller than the 1.5% gain that was estimated for January by the data agency in the prior report. The advance estimate for February is for a 0.9% increase in sales. Since consumer spending accounts for over 60% of Canadian economic activity, it is critical for overall GDP results.

Statistics Canada reported that its Industrial Product Price Index (IPPI) rose 0.4% in February while its Raw Materials Price Index (RMPI) rose 0.6% during the month. A 7.8% jump in energy prices at the industry level was the primary driver. Similarly, at the raw material price level, a 4.8% gain in crude energy prices was the largest gain. On a year-over-year basis, the IPPI is up 5.4% and the RMPI is 8.6% higher. The IPPI and RMPI data are closely watched as they indicate relative inflationary pressures at the industry and raw materials levels and will apply those pressures to consumer prices.

Statistics Canada announced that its New Housing Price Index (NHPI) was flat in February, following a 0.2% advance in January. On a year-over-year basis, the index is now down 1.9%. Price weakness continues to contrast sharply with the apparent demand for housing. These results are weaker than consensus expectations.

 

Regards, 

Glenn

Note:
All index performance is in Canadian dollars.

IMPORTANT DISCLAIMERS
The information in this letter is derived from various sources, including CI Global Asset Management, CRA, Bloomberg, National Post, Globe and Mail, Wall Street Journal, Bloomberg, Reuters, Investment Executive, Advisor.ca, MarketWatch, Toronto Sun, The Guardian, MSN.ca and Statistics Canada at various dates. This material is provided for general information and is subject to change without notice. Before acting on any of the above, please contact me for individual financial advice based on your personal circumstances. Certain statements contained in this communication are based in whole or in part on information provided by third parties and CI Global Asset Management has taken reasonable steps to ensure their accuracy. Market conditions may change which may impact the information contained in this document.