Banks and Energy Rose Together, and Each Needs a Different Hormuz
The S&P/TSX Composite gained 0.92% to 35,993.00 at 3:55 p.m. ET because the two sectors that carry it rose at once: Royal Bank, TD, BMO, Scotiabank and CIBC gained between 1.2% and 2.2%, while Canadian Natural Resources rose 4.7% and Suncor 3.8%, according to Trading Economics. Gold miners fell about 1%. The index narrowed its distance from the August 25 record to 2.6%, from the 3.5% the Market desk measured against Friday close this morning.
Energy needs Hormuz to stay shut, and the banks need that shutdown not to reach the Bank of Canada. Canadian 10-year yields fell 2.3 basis points to 3.855% today, according to Reuters, while the Economy desk reported that a December hike is still priced at 88%. A portfolio long both sectors is long both outcomes.
The window omits October 12, when the TSX was closed for Thanksgiving, and the October 13 level is the 3:55 p.m. ET reading, five minutes before the close. The dashed line marks the August 25 record close of 36,957.60.
The TSX has gained 1.4% since the September 16 Federal Reserve decision, against 3.4% for the S&P 500, which closed at 7,551.81 that day. Today the S&P 500 finished flat near 7,805 while the TSX advanced.
The 2027 Oil Contract Is Pricing What the Front Month Is Not
WTI settled at $94.14, up 0.4% and its highest close since September 24, while Brent settled at $105.69, down 0.9%, according to Reuters. WTI futures for calendar 2027 reached a record $84 for a twelfth consecutive day. The front of the curve eased while the back rose, which is the shape of a market pricing a longer disruption and not a sharper one.
Brent has pulled away from WTI since mid-September, and today narrowed the gap by $1.36 without closing it. The spread is $11.55 at the settle, against $12.91 on Monday.
The October 13 values are the Reuters settlements and all earlier values are Investing.com daily closes. The Brent and WTI contracts were $2.91 apart on September 17 and $12.91 apart on October 12.
The Geopolitical desk placed Dated Brent at a record $154 on October 5 against futures near $105, and Western Canadian Select at a $25.55 discount to WTI, the widest since 2023. Producers value barrels over years, which makes the 2027 WTI contract more relevant to Canadian Natural and Suncor than the front-month Brent print that fell today. Goldman Sachs raised its December Brent forecast to $90 from $85 and estimates a risk premium of just over $20 a barrel, according to Seoul Economic Daily.
The VIX at 15 Is Pricing Neither Curve
The VIX traded near 15.3 this afternoon, according to Investing.com, against 15.21 on Monday. The Behavioural desk set that against IMF PortWatch data showing 4 Hormuz transits on October 4 against a baseline of 85 a day. Equity volatility is describing a calm month while the oil curve is describing a long year.
The tests arrive in order: U.S. CPI this week, Canadian September CPI on October 19, and both central bank decisions on October 28. Tomorrow morning the TSX opens 2.6% below its record with banks and energy on the same side of every one of those dates. Markets give a hike on October 28 about a one in four chance, so a December hike priced at 88% is where the two sectors would be forced to disagree.