Market Performance & Fundamentals

U.S. equities have rebounded strongly, gaining approximately 8% year-to-date, driven by robust first-quarter corporate earnings that exceeded expectations. Technology, artificial intelligence-linked companies, and the energy sector have led gains. Forward profit estimates continue to move higher, providing important support for equity valuations.

Key Risk: Energy Markets & Geopolitics

The primary concern remains the U.S.-Iran impasse and its impact on energy markets. The Strait of Hormuz remains a critical chokepoint. Without a diplomatic breakthrough, sustained energy supply constraints could emerge as inventory buffers deplete, potentially reigniting inflation pressures while simultaneously dampening economic growth—a particularly acute concern heading into the summer travel season.

U.S.-China Relations

Recent constructive meetings between U.S. and Chinese leadership have reduced escalation risks. Both sides have framed discussions positively, with negotiations underway regarding trade, tariffs, and technology policy. While details remain uncertain, the near-term benefit is a continued trade truce between the world's two largest economies.

Bond Yields & Income Opportunities

Global bond yields have risen meaningfully in recent months, with U.S. 10-year Treasury yields at 4.56% and Canadian 10-year yields at 3.58%—both up approximately 50 basis points since late February. While this creates near-term headwinds for bond prices, it has improved income opportunities moving forward.

Recommendation

I recommend maintaining equity allocations in line with your long-term investment targets while preserving diversified exposures. Corporate earnings momentum continues to provide support, though I remain attentive to the possibility that prolonged energy disruptions could create material headwinds ahead.

 Enjoy your weekend.

Tim