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October 2021

Equity and Fixed Income Strategy

Rates Rising Again - Not Such a Bad Thing for Canadian Stocks eh?

Stéphane Rochon, CFA, Equity Strategist; Richard Belley, CFA, Fixed Income Strategist; Iritza Naqvi, Associate 

Inflation continues to be a key part of the investment narrative and we do not see this situation changing in the short term. The recent impact has been felt at the pump, grocery store, car and recreational vehicle dealerships to name just a few examples. For manufacturers, retailers and transportation companies, acute “supply chain issues” including spiking shipping costs continue to hurt production and push up total production costs as noted by a number of huge companies including Fedex, Costco and Nike. While this trend could be negative for very expensive “high duration stocks”, particularly in the tech space, the historical impact has actually been much kinder to sectors such as financials, energy, mining and industrials. These sectors just happen to account for about 70% of the value of the TSX which should position our market for outperformance vs. the S&P 500. 

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Do not hesitate to give either of us a call at 416 359-7565 or 416-359-7564 or email Sharon Kubicek or Alisa Carli if you have any questions respecting your portfolio and the prevailing investment, economic and political issues at play today.

Sharon and Alisa