The TSX last traded on Friday, May 15, when it closed at 33,833, down 434 points or 1.27% on a session defined by a global bond selloff, stalled Iran negotiations, and a sector split that illustrated the market's unresolved tension between energy tailwinds and rate headwinds. The index then sat closed for Victoria Day on Monday. It reopens this morning into a qualitatively different data environment than the one it left.
Two things have changed since Friday's close. First, Trump announced overnight that he had postponed a planned military strike on Iran, pushing Brent crude down 2.7% to $109.09. Second, Statistics Canada released April CPI this morning at 2.8%, below the 3.1% consensus and below the Bank of Canada's own peak forecast of "around 3%." Core inflation fell to 2.0% on CPI-trim, a five-year low. The combined effect is a partial unwind of two of the three forces that drove Friday's selloff: the immediate escalation premium in oil has been removed, and the hike risk embedded in the GoC yield curve has been reduced.
The third force, the structural Hormuz disruption and its stagflationary read-through, is unchanged.
Where Friday Left the Tape
Friday's session established the positions the TSX carries into today's open. The energy sub-index gained 2.07% on the day even as the broader market fell, with Canadian Natural Resources adding 1.2% and Suncor Energy up 2.5%, supported by Brent surging above $112 on the absence of progress in US-Iran talks. Gold miners suffered their worst single session in months: Agnico Eagle fell 6.2%, Barrick Gold lost 5.8%, and Wheaton Precious Metals shed 6.1%, all driven by a surge in U.S. Treasury yields and a stronger U.S. dollar reducing the appeal of non-yielding precious metals. Canadian bank stocks moved lower, with Royal Bank of Canada and TD Bank both shedding more than 1%, pressured by the same yield-curve dynamic that lifted energy and crushed miners. Brookfield Asset Management fell 4% on rate sensitivity.
The GoC 10-year yield closed the week at 3.70%, its highest in two years, having climbed from 3.54% a week earlier. That move was the primary mechanism for the bank and utilities selloff: as Canadian yields rise, rate-sensitive equities de-rate, and fixed-income alternatives become more competitive. The chart above shows the TSX composite and its three key sectors since the war onset, with Friday's divergence annotated.
Since the war onset on February 28, the TSX energy sub-index has gained approximately 23.7% while the composite is down 4.5%. Gold miners, which rallied initially as a safe-haven bid, have given back nearly all those gains under pressure from rising bond yields. Canadian financials have underperformed the composite throughout. Friday's session compressed all three trends into a single trading day.
The Three-Way Read for Today's Open
Energy stocks open with a headwind. Brent's 2.7% decline on the Trump postponement removes the specific fear premium associated with an imminent new military strike, not the war premium associated with the ongoing Hormuz disruption. For Canadian Natural Resources and Suncor, which are priced against a Brent range rather than a specific escalation event, the relevant question is whether oil stabilises above $105 or continues lower if the postponement narrative builds. The structural supply case for oil above $100 has not changed. A 2-3% energy sector pullback at the open is the most likely read.
Gold miners open with a potential relief bid. The mechanism is indirect but clear: the below-consensus CPI print and the five-year low in core inflation reduce the probability that the Bank of Canada hikes in June, and they also reduce the pressure on GoC bond yields. If the 10-year GoC pulls back from 3.70% toward 3.55% on today's data, the rate-driven headwind that crushed Agnico Eagle and Barrick on Friday partially reverses. Gold at $4,531 has been under pressure from the U.S. 10-year at 4.61%, but the CPI miss is the first data point since the war started that argues against further near-term rate increases in either Canada or the U.S.
Banks are the most nuanced call. The below-consensus CPI removes hike risk, which is modestly positive for bank valuations. But the GoC 10-year at 3.70% still represents an elevated yield environment that compresses mortgage origination margins and creates unrealised losses in bond portfolios held to maturity. Royal Bank and TD, which shed more than 1% each on Friday, may recover modestly on the rate recalibration but are unlikely to stage a strong rally on a single CPI print that still shows headline inflation at 2.8%.
The CAD and the Bond Market
The CAD/USD rate adds a layer to the Canadian portfolio picture. The Canadian dollar has been relatively stable against the U.S. dollar since the war began, according to the Bank of Canada's April MPR, trading in a tight range as higher oil prices, which normally support the CAD, have been offset by global risk-off sentiment and U.S. dollar strength. This morning's below-consensus CPI, combined with the Brent decline, creates a mild CAD softening pressure: the commodity tailwind is reduced, and the rate differential argument for CAD (a potential BoC hike) has weakened. For Canadian portfolios with U.S. equity exposure, that softening translates into a modest FX tailwind on the translation of U.S. dollar returns.
The GoC 10-year at 3.70% is the number to watch for the rest of the session. If today's CPI data drives a meaningful rally in Government of Canada bonds, pushing yields back toward 3.50-3.55%, the rate-sensitive sectors of the TSX, financials, real estate investment trusts, and utilities, will benefit directly. If the bond market is unmoved because it is still pricing the structural Hormuz inflation risk regardless of the CPI miss, the June 10 rate decision remains uncomfortably open even with today's benign core data.