Rising bond yields and a deal-driven drop in Canada's largest oil sands name pushed the S&P/TSX Composite to 35,445.54 on ordinary volume.

Equities priced relief on Friday, but Treasury yields and USD/CAD closed higher, and the currency has done more to separate Canadian portfolio returns since August 26 than any move in the TSX.

WTI crude rose from $69.50 to $89.38 between June 30 and September 29 while USD/CAD moved from 1.4210 to 1.4188, and the widening gap between US and Canadian two-year yields tracks the currency far more closely than oil does.

The 3-month yield fell and the 30-year yield rose after the August PCE, while the US minus Canada 10-year spread and USD/CAD kept climbing.

WTI fell roughly 5 percent this week and Treasury yields hit fresh multi-decade highs, but neither move explains what happened to the TSX or the loonie.

Five desks, one throughline. A 175 basis point gap between the Federal Reserve and the Bank of Canada moved the currency, the bond market, the mining sector and client conversations this week, while oil told a stranger story of its own.

USD/CAD closed at 1.4138 Thursday, its weakest level for the loonie since early August, as a hawkish Federal Reserve and a steady Bank of Canada pulled further apart.

A Hormuz de-escalation report lifted oil and calmed equities this afternoon. It did nothing for the Canadian dollar, because the real story today is in the bond market, not the Persian Gulf.

The composite index closed at 35,933.27 Wednesday, down 402.34 points as base metal shares reversed the same sector gains that drove a 326 point rally Tuesday, while energy names cushioned the decline as oil held near $92.

The Fed hike case is running on U.S. demand while the Bank of Canada hike case is running on crude, which turns a Hormuz peace deal into a double negative for the Canadian dollar.

The TSX Composite closed at 36,228.74 Tuesday, up 0.61 per cent, rebounding sharply from a September 16 low as technology and base metals names offset a sixth straight session of falling oil.

The Federal Reserve raised its policy rate for the first time in over three years on September 16, opening a widening gap with a Bank of Canada that has now held seven consecutive decisions at 2.25 per cent.

The composite fell 67.61 points Friday to cap a week shaped by the Federal Reserve first rate hike since 2023 and a Hormuz-driven swing in oil. Energy was the sole sector to post a weekly gain among the decliners.

Thursday's Fed relief rally reversed within one session, and the asset that should have fallen alongside rising bond yields did the opposite instead.

Seven consecutive holds at 2.25 percent look increasingly conservative next to a Federal Reserve that just raised its policy rate for the first time since 2023, and it is arriving while Canadian inflation is stuck at 3.0 percent.

A rate increase that would have rattled markets a year ago produced a contained pullback and a same day recovery. The calm reaction says more about investor psychology than about the underlying risk.