Today's Market Brief — September 1, 2026

Markets Overview

A fresh Middle East escalation and a fast-rising Fed rate-hike bet dominated the start of the week. U.S. forces struck two Iranian rocket launchers on Larak Island on Sunday — the first acknowledged U.S. strike on Iranian positions in about a month — after Iran's Revolutionary Guard was seen preparing to fire rockets carrying sea mines into the Strait of Hormuz; Iran retaliated with a missile attack on U.S. forces in Jordan, though nearly all incoming missiles were intercepted. The exchange ended markets' recent de-escalation bet, sending oil sharply higher and pulling stocks lower Monday, while Fed rate-hike odds for the September 16 meeting kept climbing.

Canadian Equities (TSX)

The S&P/TSX Composite fell about 280 points (-0.8%) Monday to 36,554, giving back some of last week's gains as the Iran escalation and rising bond yields weighed on sentiment heading into tomorrow's Bank of Canada rate decision.

U.S. Equities (S&P 500, Dow, Nasdaq)

U.S. stocks fell Monday: the Dow dropped 0.70% to 53,186, the S&P 500 lost 0.33% to 7,686, and the Nasdaq eased 0.12% to 26,371. Even with the pullback, August itself was a strong month — the S&P 500 gained 2.6%, the Nasdaq rose 3.9%, and the Dow added 1.3% for a fifth straight monthly advance.

Bond Yields & Interest Rates

The U.S. 10-year Treasury yield climbed to about 4.75% Monday, a fresh high for this cycle, as the Iran escalation and rising Fed rate-hike bets pushed yields higher together.

Federal Reserve & Rate Expectations

Odds of a 25-basis-point hike at the Fed's September 16 meeting have climbed further to about 66% on the CME FedWatch tool — up sharply from roughly 46% right after Fed Chair Warsh's Jackson Hole speech, and from under 35% before it. Warsh has pointed to PCE inflation running at 3.7% over 12 months and 4.1% over the past six, both well above the Fed's 2% target; Barclays now expects two more hikes this year, in September and December.

Canadian Dollar (CAD/USD)

The loonie held up better than many peers, with USD/CAD easing slightly to about 1.3870 today as rising oil prices supported the Canadian dollar even as broader Fed rate-hike bets favoured the U.S. dollar elsewhere.

Commodities (Oil & Gold)

Oil jumped on the Iran news: Brent crude rose 1.54% to about $89.46 a barrel and briefly topped $90, while WTI advanced 1.44% to around $84.60. Gold eased to about $4,440 an ounce as a firmer U.S. dollar and hawkish Fed expectations offset some of the safe-haven demand from the Middle East escalation.

Bank of Canada & Central Banks

All 35 economists surveyed ahead of tomorrow's Bank of Canada decision expect another hold at 2.25%, and bond markets price only about a 3% probability of a hike. Beyond tomorrow, big banks are split: BMO, CIBC, RBC, and TD see the rate holding at 2.25% through year-end with hikes starting in 2027, while National Bank and Scotiabank expect a move to 2.50% in October and 2.75% by year-end.

Global Markets Snapshot

Three storylines are converging this week: renewed Iran-U.S. tension, a fast-rising Fed rate-hike bet, and the Canada-U.S. tariff dispute, with Canada's retaliatory tariffs on roughly $20 billion of U.S. goods due to take effect September 8. Tomorrow's Bank of Canada decision is the most direct domestic touchpoint among them.

What This Means

Day-to-day market moves are normal and are not a reason to change a long-term plan on their own. If today's news raises questions about your own portfolio, protection, or goals, that is a good reason to book a 30-minute session rather than react alone.

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