Wind warning

Odds of a rate cut a week from next Wednesday hit 90% this morning. That’s doubled in a week. It shot up in seconds after the latest jobs report.

Ditto in the States. The FedWatch tool is showing 100% odds of a plop there as this is being written.

The winds have shifted. For ill, it seems.

In this country the unemployment ranks have swollen quickly. We lost 40,800 jobs in July and another 65,500 last month. That shoves the out-of-work rate above 7% for the first time in a decade (ignoring the temporary hit of Covid). Part-time and self-employed people got seriously whacked but full-time positions also vanished – manufacturing and transportation lost 43,000 positions.

So, yeah, the trade war is hurting. Trump is hurting us, and Americans. We’ve shed over 58,000 manufacturing jobs this year and the unemployment rate has risen half a point. More jobs are about to be lost in the auto sector (2,200 at GM alone) while this week the building industry in Ontario said 100,000 trades in the GTA  will be out of work in 2026 as real estate projects are nixed for lack of buyers.

In America job creation barely staggered ahead at 22,000 for the month while a revision for June indicated an absolute job loss – the first since the pandemic. The unemployment rate increased, and even a newly-installed, Trump-friendly data czar could not smear lip gloss on this porcine report.

Face it. Tariffs. Mass deportations. Trade policy reversals and indecision. DOGE slashing. All those Trumpian chickens are coming home to roost just seven months after the guy arrived and started to change everything.

Well, now the fallout.

The Bank of Canada and the Fed will (Mr. Market says) cut their policy rates on the 17th. Not a lot – just a quarter point each. Most economists think we are on track for four reductions in Canada, two of which will come this autumn and the others in the first half of 2026. That will take rates down a full percentage point, and deliver mortgages in the low 3% range.

In the States, the Fed is on course for six cuts over the next year. Maybe more in the latter six months once Trump has solidified his control of the central bank. In fact, 2026 is looking a tad scary for the Yanks. The job market is weakening fast. The impact of tariffs is just starting to be felt by consumers and businesses. The country is being militarized, replete with massive detention centres, thousands of new federal agents, street protests and increasing polarization in the face of presidential aggression. And monetary policy may be controlled by the White House. The bond market is already reacting.

In short, gulp.

Lower rates will help make real estate more financeable. It may lead to more sales and (as stated here yesterday) dash the hopes of those who want a collapse. Low rates are also carbs for the stock market, so financial portfolios should benefit as companies reduce borrowing costs and shed workers,

But we’re in a new dimension now. The Trump years have truly arrived, and as they roll out the insanity of the president’s agenda – protectionism, tariffs, deportations, social engineering and pissing off your best friends and trading allies – will vex us all. Canada and the US are so integrated that collateral damage is inevitable.

Will ongoing job worries and financial insecurity squish out the positives of cheaper rates, lower mortgages and higher stocks?

Dunno.

But look at Carney. He dropped personal tax rates. Killed the carbon tax. Trashed the digital tax. Dumped the EV mandate today. And the coming budget will throw big money at projects and emergency support. He gets it.

The winds are picking up.

About the picture: “Rumour has it that you are desperate for doc pics,” writes Charlyn. “This is Roger, a phantom poodle now 10 years old, stopping to be admired by the fountain on one of our walks. I’ve enjoyed your blog for years – thanks for the advice, humour and great commentary on some of the craziness in our world.”

To be in touch or send a picture of your beast, email to ‘garth@garth.ca’.

Source: https://www.greaterfool.ca/2025/09/05/wind-warning/