Daily roundup of research and analysis from The Globe and Mail’s market strategist Scott Barlow
Household debt
CIBC economists Benjamin Tal and Katherine Judge take a critical look at Canadian household balance sheets,
“To be clear, we are not out of the woods yet. We estimate that the refinancing cost to mortgage borrowers will not ease significantly until February 2027, but any evidence of stress should be visible by now. At around 4-per-cent growth, total household debt outstanding is now rising at close to the slowest pace on record (excluding Covid distortions). That weakness is mostly due to the ongoing slowing growth in mortgages outstanding, which as of August were rising by roughly 2 per cent year-over-year, the slowest pace seen in 25 years … We start with a quick glance at the insolvency rate. The picture is clear: the insolvency rate is on the rise — but so far that trend is nothing more than mean reversion, with the current rate only now approaching 2019 levels … We estimate that at this point, a one percentage point increase in the unemployment rate would lead to a 23-per-cent-point increase in the insolvency rate, in line with the 2008 experience … Simply put, the credit quality position of Canadian households is surprising on the upside” .
Coal price climbs
In not-great news for the environment, the global economy is burning more coal, as BofA Securities commodity Francisco Blanch reports,
“Benchmark Australian Newcastle coal prices have rallied by 40% this year, now comfortably trading around $150/t, their highest level in two years. As expected, El Niño-related weather has supported coal burn, especially in Asia … We are bullish natural gas into winter, with the recent force majeure in Qatar adding further upside risk to gas prices and strengthening the case for further gas-to-coal switching … Asian demand has continued to underpin coal markets. South Korea has led the gains, alongside EM Asian economies such as Vietnam and Pakistan, where sensitivity to high energy costs continues to favour coal. This comes amid constrained LNG availability due to the conflict in the Middle East, which has pushed JKM [ LNG benchmark for north Asia] above $30/MMBtu and TTF [natural gas benchmark for Europe] above €90/MWh this month. At JKM prices of $30/MMBtu, we estimate Newcastle thermal coal breakevens at more than $350/t, more than double current prices, keeping gas-to-coal switching highly compelling.
Ring of Fire
Also from CIBC, analyst Krista Friesen finds the winners from Ottawa’s commitment to the Ring of Fire,
“Ottawa’s commitment to match Ontario’s investment of up to $1-billion in Ring of Fire road infrastructure reinforces a multiyear opportunity across our E&C and heavy equipment coverage. We see BDT {Bird Construction Inc.] as the clearest beneficiary given its established Marten Falls partnership, while TIH and the engineers are also likely beneficiaries. We believe BDT’s expanded partnership announced in August warrants some renewed attention, particularly as a reminder that it has growth drivers beyond data centres after its shares were seemingly caught up in the broader weakness across AI ‘pick-and-shovel’ names. The Ring of Fire opportunity spans community infrastructure, access roads and eventual mine development, with last week’s announcement improving funding visibility for the next stage of activity”.
Bluesky post of the day
“.. down more than 60% from a year earlier.”
@bloomberg.com 🇺🇸
www.bloomberg.com/news/article…
— Carl Quintanilla (@carlquintanilla.bsky.social) October 28, 2026 at 7:34 AMDiversion
“China’s top-secret spaceplane can’t hide in low-Earth orbit” – Ars Technica