The Twenty-Four
The Seven, September 4, 2026
Holding on, or moving on?
By Mark Parsons 4 September 2026 7 min read
In this week’s The Seven…
- On the rise - Wheat prices
- On the move - Grain shipments via Churchill
- Hold on - Bank of Canada still hanging out at 2.25%
- Petering out - Canada’s job machine
- Keep on moving - U.S. jobs surprise
- Keeping watch - Venezuelan oil
- Interesting Fact - CANXPORT expansion
- Chart of the Week - Pressure at the pumps
“Don't you know things can change/Things'll go your way/If you hold on for one more day”*
—Wilson Phillips, “Hold On”
The Bank of Canada didn’t seem to be in a celebratory mood during this week’s rate decision. It included phrases like this: "uncertainty is high and new U.S. tariffs and threats of further action pose risks to the sustainability of the recovery.”
We’ve been similarly cautious, containing our excitement over the blistering Q2 GDP reading and keeping a close eye on trade tensions and soaring energy costs.
Today we did get a dose of that reality, with Canadian jobs falling over 40K in August—well below consensus for a small gain.
So what’s the Bank of Canada to do? Hold on for one more day. The plan is to see how the war in Iran and U.S.-Canada trade tensions shake out before making its next rate move. But for now they remain in a ‘high inflation/weak growth’ bind, and will choose to wait it out.
That ‘wait-and-see’ approach won’t work for the country though. External pressures loom large. Last week it was tariffs. This week it was Venezuela (see below). Canada can’t wait for the world to change. To generate growth in such an uncertain and hostile trade environment, it will need to execute on the domestic game plan, which includes (among other things) accelerating capital projects, removing interprovincial trade barriers, and expanding non-U.S. market access.
Here’s what else we’re watching this week.
*Careful readers may note I have cited Wilson Phillips in the past. That’s on me, but trust me, finding popular song references related to monetary policy is tough.
On the rise - Wheat prices
It's not just oil being impacted by global conflicts—wheat futures have also surged. Ongoing military action and logistics bottlenecks in the Black Sea have choked off exports from Russia and Ukraine, which together account for over a quarter of global shipments. Adding further pressure are drought conditions across North America, Europe, and Australia, higher fertilizer and diesel costs.
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On the move - First grain shipment from Port of Churchill since 2020
Diversifying exports into non-U.S. markets has been Canada’s game plan since the trade war started. But a limiting factor is port and transportation capacity. The focus has been on the lucrative Asia market, and indeed there has been progress (e.g., TMX, LNG Canada Phase 1, Ridley Island Propane Exports, and most recently CANXPORT - see our Interesting Fact below).
What about Europe?
This week, the Port of Churchill loaded 30,000 tonnes of European-bound durum wheat, marking its first grain shipment since 2020. Churchill offers a shipping route to Europe, and could help diversify trade, counter U.S. tariffs, and assert Arctic sovereignty.
But to scale into a major hub, the port needs continuous permafrost rail stabilization, expanded grain elevators, and wharf upgrades. Federal, Manitoba, and Indigenous Arctic Gateway Group partners are investing to repair the rail line, rehabilitate the port, and support new exports like potash and zinc. Still a long way to go to convert to a major port, but it’s something to watch.
Hold on - Bank of Canada
We didn’t learn a ton from the Bank of Canada this week. The rate hold was widely expected, and there was no new forecast published.
From my perspective, the most noteworthy thing said is that “upside inflation risks have increased.” That reads hawkish and suggests the Bank is more worried about inflation than downside growth. The Bank is walking a tightrope: inflation is too high, but the economy is too weak. So they wait before hiking (we currently expect two quarter-point hikes in 2027).
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Reality check - Canadian jobs streak ends
We did a deep dive this morning, so I’ll keep this short. The Canadian jobs machine petered out last month—a sign that growth is slowing after a promising pickup in Q2. Alberta, too, is leveling off on jobs, as we expected. We think a rebalancing is underway in the Alberta jobs market, where slower population growth is finally going to put some downward pressure on unemployment even as job growth cools.
Keep on moving - US jobs surprise
The bigger job news came south of the border, where payrolls smashed expectations. They advanced 162K versus market expectations of only 53-55K.
This increases the odds of a Federal Reserve rate hike in September. The labour market is tight and inflation is running too hot.
President Trump will not welcome a rate hike, threatening today that he will end trading relationships with any country that the U.S. has a trade deficit with if the Fed doesn’t lower rates.
Venezuela oil - A competitive threat that can’t be dismissed
It’s easy to be skeptical about President Trump’s latest deal to increase U.S. access to Venezuelan oil reserves. Many point to the long road ahead for Venezuela to restore its oil production, the political risk and the billions in investment required to rebuild its infrastructure. After all, Venezuela oil output is about 1 million barrels per day (b/d) versus a peak of over 3 million b/d in the mid 1990s.
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Maybe, but the threat shouldn’t be dismissed either. The U.S. Gulf Coast is a major refinery centre, with refineries equipped to process Canadian and Venezuelan heavy barrels of similar quality. But Venezuela has a transportation advantage over Canada in that market. This week, in a note to clients, ATB Cormark Capital Markets said “we have already seen 2027 WCS [Western Canada Select] differentials weaken since January, clearly driven by heavy oil quality differentials in the Gulf Coast, since the initial incursion into Venezuela earlier this year.”
The lesson for Canada? Yet another reason to diversify exports. Expanding access to new markets, particularly in Asia, creates more options and better/more stable pricing for producers. It does so by reducing concentration risk - in this case, the risk that Canadian barrels could compete with Venezuelan barrels on the Gulf Coast.
Interesting Fact: CANXPORT adds to West Coast export capacity
Opened on August 27, the CANXPORT facility at the Port of Prince Rupert in B.C. Located on Ridley Island, the new facility is designed to handle 400,000 shipping containers per year, with the potential to increase capacity to 750,000. The $750-million export logistics facility provides rail-to-container transloading of multiple export products including from the petrochemical, forestry, agriculture and mining sectors.
Chart of the Week: Pressure at the pumps
I don’t need to tell you that gasoline prices have surged—you likely see or experience it every day.
A key driver is the price of crude oil, which has jumped since the war in Iran started. But it’s more than just oil. The market for gasoline is also tight. Indeed, the “crack spread”—the difference between the market price of refined petroleum products—like gasoline, diesel fuel, and jet fuel—and the price of a barrel of oil has widened.
Summer driving demand and low inventory levels, coupled with unplanned refinery slowdowns and early preparations for autumn turnaround maintenance, have kept North American crack spreads elevated above historic seasonal norms.
Diesel prices have seen even larger gains, raising input costs for farmers.
In Canada, the federal government announced it will keep its 10 cents/litre gasoline tax holiday in place until January 31, 2027 (4 cents/litre for diesel and aviation fuel). This has helped, but not enough to offset pressure from oil and crack spreads as shown in our Chart of the Week.
All of this matters for the Bank of Canada. It is waiting to see if higher gasoline prices will feed through to the broader basket of goods. So far so good, but the longer the war in Iran continues, the greater the risk it gets generalized and the more likely the Bank will need to hike its policy rate.
Looking stateside, high gasoline prices are universally unpopular and something to watch heading into the U.S. midterms. Wider crack spreads have conspired with higher oil prices to cause gasoline prices to soar to over $US4/gallon. The U.S. has been forced to lower its East Coast and West Coast gasoline imports due to refinery disruptions overseas.
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Answer to the previous trivia question: Prime Minister John Thompson was in office when Labour Day became an official national holiday in Canada in 1894.
Today’s trivia question: Who coined the term kindergarten?