Markets
Weekly Market Update - January 12, 2026
By Jason Crumley | Alek Sawchuk, CFA | Sherwin Pasha, CFA 12 January 2026 5 min read
Equity Market Commentary
Equity markets in Canada and the US started the new year on a strong note, with both indices reaching record highs last week. The TSX Composite was lifted by the materials sector on rising gold prices while the energy sector acted as a drag. Canadian energy stocks were pressured by fears that the US capture of Venezuelan President Nicolás Maduro could unleash new oil supply into the US, displacing Canadian exports. Meanwhile in the US, the S&P 500 saw market breadth improve as investors rotated out of the heavyweight technology sector and into the consumer discretionary and materials sectors. Energy stocks in the US rallied, driven by optimism that revitalizing Venezuela’s output will require significant US infrastructure and oilfield services investment.
Canadian oil prices are digesting US actions in Venezuela as Western Canadian Select crude oil prices declined 6.8% to a low of US$41.43/bbl mid last week. Oil traders were contemplating how additional supply options to the US might impact prices for Canadian crude oil. According to OPEC, Venezuela produced 921,000 barrels per day in 2024, which is less than half of what it produced in 2017 as lack of investment and other factors contributed to its decline. While there can be challenges to oil specifications and a refiner's ability to process specific grades of oil, Venezuelan oil is very similar to much of the oil produced in Western Canada. According to the Energy Information Administration, 68% of Venezuelan oil exports in 2023 were directed to China. Given the additional oil supply into the US from Venezuela, Canadian oil marketers will be looking for countries like China to purchase additional Canadian crude oil. All this could provide an opportunity for US companies, such as Chevron Corp., to revisit their previously significant role in Venezuela's oil exploration and development. As a result, the US energy sector outperformed its Canadian peers last week.
Comments from US President Trump impacted the shares of one of the world's largest alternative asset managers, Blackstone Inc. On Wednesday, Trump posted that he is “immediately taking steps to ban large institutional investors from buying more single family homes.” This poses a direct threat to Blackstone, which has a portfolio of residential assets, including the 2024 purchase of Tricon Capital for US$3.5 billion, a Canadian company with residential properties in the US. Following the news, shares of Blackstone declined by as much as 7.5% from Tuesday’s closing price.
US defence stocks including Lockheed Martin, Northrop Grumman, and General Dynamics were volatile. The group initially fell after President Trump criticized manufacturers for prioritizing stock buybacks and dividends over production speed, but subsequently rallied after he proposed a US$1.5 trillion defence budget for 2027, a massive increase from the expected US$901 billion for 2026. The fourth quarter earnings season kicks off this week with JPMorgan set to report on Tuesday while investors focus on the week’s inflation data and a potential US Supreme Court ruling on Trump’s tariffs.
Bond Market Commentary
After a relatively volatile 2025 in North American bond markets, prices have settled in both Canada and the US over the last few weeks. Internationally, price action in Venezuela's government bonds attracted the attention of traders. In the US, President Trump instructed US government-backed agencies to purchase $200 billion of mortgage bonds. According to Bloomberg, US investment grade weekly corporate bond issuance surpassed highs in September 2024, with a total weekly volume around $88 billion, as corporations take advantage of tight credit spreads (the most in two decades) and cheaper available financing. The current 2026 central bank rate expectations predict roughly two small interest rate cuts of 0.25% from the US Federal Reserve, with zero cuts expected from the Bank of Canada.
The US Supreme Court's ruling on government-imposed tariffs, originally set for last Friday, has been moved to this Wednesday. The court's decision could have an impact on the US government debt market and borrowing costs, especially if the Trump administration is forced to refund collected tariffs, which could create a rapid issuance of new short-term bonds (treasury bills). Trump’s new tariff programs (through December 14) have brought in about $171 billion for the US government, with $134 billion collected under a law called the International Economic Emergency Power Act (IEEPA), which could be overturned by the court.1
Separately, President Trump recently ordered government-backed housing agencies, such as Fannie Mae and Freddie Mac, to purchase $200 billion in mortgage bonds (investments representing a share in a pool of mortgages), in an effort to reduce mortgage rates and tackle housing affordability in the US. While intended to reduce mortgage rates, the large-scale purchase of mortgage bonds by government-backed housing agencies could increase short-term borrowing costs for financial institutions by reducing the availability of those mortgage bonds for use as collateral. In 2025, stronger mortgage bond demand contributed to a roughly 8.5% yearly return within the Bloomberg US Mortgage Backed Security (MBS) index.
Popular US luxury retailer Saks filed for Chapter 11 bankruptcy protection after missing an interest payment of more than US$100 million to its creditors. According to Bloomberg, creditors are negotiating a financing package of $1.25 billion to allow it to operate during bankruptcy protection. The company has been active over the past few years and even acquired Neiman Marcus in 2024 to expand its luxury brand presence. Given the complexity of the organization and layers of accumulated debt over the years, a refinancing package in addition to Chapter 11 protection would allow Saks some time to financially reposition.
International bond markets were also impacted by the US action in Venezuela. Venezuela’s sovereign debt market saw significant price gains driven by economic optimism and potential debt restructuring. While restructuring national debt can be complex and lengthy, the immediate impact on Venezuela's bond market witnessed some terms increasing over 30%.
The Week Ahead
Tuesday - US CPI (inflation) report; JP Morgan Chase earnings
Wednesday - Supreme Court ruling on Trump’s tariffs; US retail sales report
Thursday - Earnings from TSMC, Morgan Stanley, Goldman Sachs
Friday - US industrial production report
Kennedy & Gorton-Caratelli. “US Preview: Court Could Cancel $150 Billion of Trump Tariffs.” Bloomberg. January 9, 2026.
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