The Week Ahead: Sep 28 – Oct 2, 2026
Higher long-term interest rates are creating pressure across the economy, but that doesn’t necessarily mean central bank policy rates will follow the same path.
This week’s outlook examines the growing gap between market expectations for interest rates and what economic conditions may ultimately support. Persistent government borrowing, higher bond yields and pressure on interest-sensitive sectors are adding another layer of complexity to the outlook in both the U.S. and Canada.
3 Key Takeaways
Markets and Central Banks Are Not Seeing the Same Path
Market expectations for interest rates have moved significantly higher. The report notes that markets were pricing a U.S. policy rate near 5% a year from now and roughly 125 basis points of additional tightening in Canada—considerably more than central-bank projections or underlying economic conditions may ultimately warrant.
Higher Long-Term Rates Are Already Creating Pressure
Elevated borrowing costs can slow activity even without equivalent increases in central-bank policy rates. In the U.S., housing and non-residential construction are already showing weakness. In Canada, higher mortgage rates could add pressure to homebuilding while elevated bond yields and trade uncertainty weigh on business investment.
Canadian Growth Is Showing Signs of Moderation
July GDP is forecast to decline 0.1%, following stronger second-quarter growth. Manufacturing, retail, wholesale activity and energy exports are among the areas expected to have softened. The report sees growth moderating further later in the year as newer U.S. tariffs affect exports, investment and hiring plans.
Quote of the Week
"Expectations can change quickly. Good judgment stays grounded in the facts."
— James Leung
About the Contributor
James Leung
Senior Wealth Advisor & Portfolio Manager, CIBC Wood Gundy; Founder & Director, 6ix Wealth Foundation
James shares market commentary, economic observations, and wealth management perspectives to help investors and business leaders better understand the trends, opportunities, and developments shaping today's financial landscape.
Read the Original Commentary
This article is based on James Leung's weekly market outlook originally shared on LinkedIn and commentary from CIBC Capital Markets.
Disclaimer
This article is intended for informational and educational purposes only and should not be considered financial, investment, legal, or tax advice. Readers should consult qualified professionals regarding their individual circumstances before making financial decisions.
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