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.

Crude rose 3.1% and the TSX fell, but the clearest signal was gold dropping 2.9%: a haven priced against a near 5.2% yield stops behaving like one.

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.

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 Federal Reserve raised its target range to 3.75 to 4.00% on September 16, its first hike in three years, while the Bank of Canada has now held at 2.25% for seven straight announcements, and the split traces back to how each economy is absorbing the same oil shock.

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.

Six straight sessions of falling crude are undercutting the fuel-cost case for further Bank of Canada hikes, while a materials rally reveals where Canadian investors are actually positioning.

Gold is down 6.1 percent from its August peak even as the Middle East conflict continues, and the mechanism is the Federal Reserve, not the geopolitics.

A 175 basis point policy gap, the widest since the cutting cycle began, traces back to two very different inflation problems.

Kahneman and Tversky documented why a two-year cutting narrative does not release its grip just because the Federal Reserve reversed it.

The Fed raised its policy rate for the first time since 2023 while the Bank of Canada held and floated cuts, yet Canadian bond yields kept climbing regardless of which way the Bank leans.

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.

Two central banks read the same energy-driven inflation data this week and reached opposite conclusions about whether it will last. Thursday sided with the one that held.

The gap between the Federal Reserve and the Bank of Canada compressed to 150 basis points by December, and the September hike pushed it straight back to 175.