Canada’s environmental ‘realism’ looks more like surrender | Tzeporah Berman - The Guardian

Published: October 05, 2026 at 3:29p.m. EDTLarry Berman discusses his outlook for the markets. The Canadian economy has had an anchor on it for the better part of a decade. A big part of that anchor was due to policy decisions at the federal level. That trend appears to be changing. Our chart today highlights the Canadian dollar (top) and two major drivers of Canada’s current (trade in crude oil) and capital accounts (trade in debt securities). Canadian dollar Historically, crude oil (pink line) was a major driver of the trade balance in Canada. While Canada holds a trade surplus with the U. S., we have a deficit excluding crude. There has been a lower correlation in recent years on crude oil and an increasing correlation on interest rate differential. When international investors generally want a higher yield, they look to countries that have better total return possibilities. That seems to be improving. For most of the past decade, Canadian interest rates have been below U. S. rates when looking at the two-year maturity (green line). For the prior decades post coming off the gold standard in the early 1970s, Canada needed to offer higher yields than in the U. S.