Key Performance Drivers

FTSE Canada Universe Bond Index: Yields drifted lower early in the quarter but surged after February 28, as a spike in energy prices drove inflation expectations materially higher. The reversal in yields resulted in bonds giving up most of their returns for Q1 2026.exposure to energy and materials. It reached record highs in January before volatility from the Iran war and a gold price reversal trimmed gains.

S&P/TSX Composite Total Return Index: Benefited from high exposure to energy and materials. It reached record highs in January before volatility from the Iran war and a gold price reversal trimmed gains.

S&P 500 Total Return Index: Underperformed due to heavy weightings in technology and AI names, which were the biggest detractors during the quarter's growth sell-off.

MSCI EAFE (Net) Index: Remained relatively flat but outperformed US markets. Defensive tilts and lower exposure to mega cap technology names closely tied to the US provided insulation from the broader growth retreat.

ATB Compass Portfolios & ATBIS Pools Update

Economic Update

1. THE CANADIAN ECONOMY: THE RESILIENCE OF THE NORTH 

   As we close the first quarter of 2026, the Canadian macroeconomic landscape is defined by a fragile but persistent stability. While federal fiscal policy grapples with the lingering effects of global trade realignments, the domestic economy is charting a path of "tempered growth".
• GDP & Monetary Policy: The Bank of Canada, IMF and other forecasters project real GDP growth of 1.1% - 1.6% for 2026. On March 18, the Bank of Canada elected to maintain the policy rate at 2.25%. This "hawkish hold" was a strategic response to the Middle East energy shock; while inflationary pressures from energy costs have spiked, the BoC remains cautious of stifling a softening economy and labor market.
• The Labor Market Paradox: We are observing a significant structural "mismatch" in the workforce. The national unemployment rate climbed to 6.7% in February, yet our provincial partners report a critical shortage of high-tier technical and engineering talent. This paradox suggests that while traditional sectors are shedding roles due to automation and high input costs, the "digital transformation" of the industrial base is creating a vacuum that the current labor supply is unlikely to continue to fill.

2. THE IRAN CONFLICT & THE OIL SHOCK: A DOUBLE-EDGED SWORD 

   The geopolitical flare-up in the Middle East has reintroduced a "security premium" into global energy markets that we haven't seen in years. For Alberta, this presents a complex fiscal narrative.
• The Hormuz Bottleneck: The effective closure of the Strait of Hormuz following the outbreak of the Iran conflict on February 28 has sent West Texas Intermediate Oil and Brent Crude Oil into a period of extreme volatility, with prices oscillating between US$80 and US$100. While global supply remains theoretically oversupplied, the logistical risk has paralyzed spot markets.
• The Qatar Factor & Canadian LNG: On March 5, QatarEnergy declared Force Majeure on several Liquefied Natural Gas deliveries due to security threats in the Gulf. This disruption has fundamentally shifted the gaze of European and Asian buyers toward the Western Canadian Sedimentary Basin, bolstering Canada's status as the premier "safe harbor" for energy security.

3. AI INFRASTRUCTURE: THE NEW UTILITY

   The era of "generative Al hype" has ended, replaced by the pragmatic era of Al infrastructure. In Q1 2026, data centers have officially transitioned from "tech assets" to "critical utilities".
• Sovereign Compute: The federal government's "Sovereign Al Data Centre" RFP, which closed in February, has signaled a shift toward nationalizing compute capacity. The focus is no longer just on software, but on the physical security and domestic ownership of the hardware.
• The Alberta Advantage: Alberta is currently leading the nation in Al readiness. The Alberta Electric System Operator (AESO) has seen grid connection requests for data centers explode to over 20,000 MW, though current reliability limits hold near-term load to ~1,200 MW.
• Energy and Compute Convergence: Our deregulated power market is our greatest asset. New provincial legislation (Bills 8 and 12) incentivizes a "bring your own power" model. We are seeing a new class of "industrial compute" facilities that co-locate with natural gas generation, bypassing traditional grid constraints. This makes Alberta the de facto Northern Hub for high-density Al training, which offers a stable, low-latency and energy-secure environment.