Resilient Economy, Higher Bond Yields, and Canada's Jobs Report Ahead — Weekly Market Update

“Value investing is at its core the marriage of a contrarian streak and a calculator.” 
–– Seth Klarman

 

Last Week’s Overview

Source: Bloomberg (October 1, 2026)

Weekly Insights

Each week, we break down the key events and market movements shaping the investing landscape. From economic data to investor sentiment and global headlines, this section captures what mattered most and how it impacted markets.

U.S. Manufacturing Keeps Growing

U.S. factory activity expanded for the ninth straight month in September, its longest run of expansion since 2022, with the ISM Manufacturing Index at 54.5 (any reading above 50 signals growth). New orders strengthened, order backlogs reached their highest level since February, and factory employment rose for a third consecutive month, with 12 industries reporting growth. For our portfolios, this steady momentum supports companies tied to industrial equipment, infrastructure, and business investment, giving them greater visibility into future earnings.

Source: Bloomberg (October 1, 2026)

Layoffs Stay Near Historic Lows

Initial jobless claims fell to 197,000 for the week ended September 26, the lowest level since July and better than the 200,000 economists expected. Continuing claims also dropped to about 1.7 million, their lowest level since March 2023, showing that companies are holding on to their workers and few people are relying on unemployment benefits for long. A stable job market supports household income and spending, which in turn benefits the consumer-focused, financial, and other economically sensitive businesses we hold.

Source: Bloomberg (October 1, 2026)

Higher Bond Yields Bring Better Income Opportunities

The 10-year U.S. Treasury yield briefly reached 5.34%, its highest level since 2002, reflecting strong demand for capital (including investment in AI infrastructure) and an economy that continues to grow despite higher borrowing costs. While rising yields can cause short-term price swings, they also mean high-quality government bonds now offer income levels that have rarely been available over the past two decades. For our portfolios, this restores bonds as a meaningful source of income and diversification, while reinforcing our focus on companies with strong cash flow and durable earnings.

Source: Bloomberg (October 1, 2026)

Key Drivers of Our Outperformance

We believe in transparency when it comes to where outperformance is coming from. This section spotlights a top-performing company we hold, a sector where we've taken a winning position, and a strategy that has driven recent success across our portfolios.

• Company Highlight: Booking Holdings Inc. (BKNG)
  
  
  
• Booking Holdings rose 4.5% last week as investors took a fresh look at the company following a recent pullback tied to concerns that AI could disrupt online travel booking. Several analysts reaffirmed their positive ratings, pointing to Booking's global scale and its broad network of independent hotels and properties. Booking is embracing AI rather than being displaced by it, building AI-powered travel tools into its "Connected Trip" strategy, which is a key reason we continue to own the company.
  
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• Source: Optimize Asset Management (October 1, 2026)

• Sector Highlight: Information Technology
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• Information Technology was our strongest contributing sector last week, led by ASML (+3.84%), Microsoft (+2.46%), and NVIDIA (+1.27%). Demand for AI tools and infrastructure remains strong, and Microsoft in particular continues to benefit as it builds AI into its Azure cloud platform and Copilot assistant. We remain selective, focusing on technology leaders that are turning AI investment into real revenue, which positions them well even as higher interest rates weigh on growth stock valuations.

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• Source: Optimize Asset Management (October 1, 2026)
  

• Style Highlight: Quality
  
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• Our Quality strategy, which focuses on financially strong companies with consistent earnings and established competitive positions, was our best-performing style on a relative basis last week. Microsoft led the way, while Canadian holdings Dollarama (+3.14%) and Brookfield Infrastructure (+1.93%), along with Linde (+1.05%), also posted gains. In a week of higher bond yields and uneven stock performance, investors held on to dependable businesses like these, reinforcing why quality remains a cornerstone of our approach.
  

  Source: Optimize Asset Management (October 1, 2026)
  

   

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What To Look For Next Week

We also look ahead to the economic reports, events, and earnings that may influence the week ahead. From inflation and jobs data to corporate updates from key market players, this section keeps you informed on what's coming and why it matters.

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• U.S. Services Sector Report (Monday, October 5): The ISM Services Index measures activity across service industries such as health care, finance, retail and hospitality, which make up the majority of the U.S. economy. August's reading rose to 55.4, beating expectations of 54.3 and marking the strongest gain in six months, with business activity at 61.7 and new orders at 60.9. Another strong reading would signal broad, healthy demand across the economy, which supports corporate revenues and the businesses we hold.
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  Source: Institute for Supply Management (October 1, 2026)
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• Federal Reserve Meeting Minutes (Wednesday, October 7): The Fed will release detailed minutes from its September meeting, where policymakers raised their benchmark rate by 0.25% to a range of 3.75% to 4.00% to keep inflation on track toward its 2% target. Encouragingly, the Fed also raised its U.S. growth forecast to 2.3% for 2026 and 2.4% for 2027, and lowered its unemployment projection to 4.1%. The minutes will offer insight into how officials see the path for interest rates through year-end, helping investors gauge the outlook for both bond yields and stock valuations.
  
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  Source:  Federal Reserve (October 1, 2026)
  
  
• Canada Jobs Report (Friday, October 9): Statistics Canada's monthly Labour Force Survey shows how many Canadians are working and is one of the most closely watched gauges of our domestic economy. In August, the unemployment rate held steady at 6.4% as expected, while the jobless rate for core-aged women improved to 5%. September's report will help show whether hiring picks up heading into the fall, which matters for consumer spending, Bank of Canada decisions and the Canadian holdings in our portfolios.
  
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  Source:  Statistics Canada (October 1, 2026)

Source of All Economic Data: Bloomberg

Disclaimer: This report is for informational purposes only and does not constitute investment advice. Please consult with your financial advisor before making any investment decisions.