Canadian Capital Forum 3: Canada’s Rates, Loonie, and Trade
Author(s): Scott Douglas Jacobsen
Publication (Outlet/Website): A Further Inquiry
Publication Date (yyyy/mm/dd): 2025/10/11
Michael Ashley Schulman, CFA, is Chief Investment Officer and a founding partner of Running Point Capital Advisors, a multifamily office delivering integrated investment, planning, tax, insurance, and estate services, based in Los Angeles, California. He oversees global macro research, asset allocation, and public- and private-markets strategies, including impact mandates. Schulman is a widely quoted commentator, frequently providing analysis to Reuters and other outlets on technology, energy, trade, and market structure. His work centers on translating macroeconomic trends, U.S. fiscal policy, and the global tech landscape into actionable guidance for families and entrepreneurs.
In this interview with Scott Douglas Jacobsen, Schulman parses Canada’s outlook: measured Bank of Canada easing from a 2.5% policy rate, a Q2 GDP wobble driven by inventories and housing, narrowing fiscal room per the PBO, and consumer insolvency signals. He sees open primary markets amid sentiment-driven TSX highs and Maple bond issuance, but warns trade-policy risk ahead of the 2026 USMCA review could pressure the loonie, especially if rate differentials widen or oil sours. Bottom line: modest mortgage relief, sticky food prices, and TFSA gains vulnerable to trade headlines.
Interview conducted October 10, 2025, in the afternoon.
Scott Douglas Jacobsen: How far and how fast will the Bank of Canada ease from the 2.5% policy rate?
Michael Ashley Schulman: The Bank’s not exactly revving the rate-cut engine like it’s the Calgary Stampede; we’re getting there, but with polished pacing, not pyrotechnics. Macklem will likely guide you down from the peak with all the enthusiasm of a Torontonian shoveling snow in April; he’ll be deliberate, skeptical, and eyeing the sky for more. Markets want the stimulus that comes with fast cuts, but the BoC seems to prefer a caution. I suspect 50–75 bps of additional cuts over the next 6–9 months, front-loaded if trade shocks bite, slower if the loonie wobbles or jobs surprise hot. If the U.S. Federal Reserve lowers rates further it will help the BoC’s path as it will help many foreign central banks.
Jacobsen: Is the growth wobble transitory, as Q2 GDP fell about 0.4%?
Schulman: GDP’s stagger looks more Kim’s Convenience, an awkward sitcom-level stumble, not a full-blown economic dystopia. I think it was down 0.4%. But yeah, maybe people will be buying more ramen.
Inventory drawdowns and softer housing data dragged you down, but it’s more of a side-step. That said, for average Canadians already staring down a supermarket Caesar salad that costs more than their streaming subscription, and rent hikes with the emotional fortitude of a Bachelor Canada contestant, earnestly trying to look composed while everything around them is a beautiful mess. To use your word, it’s a wobble that’s not affecting everyone, but seems to be affecting enough people to be noticeable.
Jacobsen: How much fiscal room is left? The PBO projects a bigger 2025–26 deficit and rising debt-to-GDP.
Schulman: Fiscal room? You’ve got about as much as a snowbird trying to pack an extra suitcase without paying Air Canada’s fees. Ottawa’s been leaning hard into spending, and with a rising debt-to-GDP ratio, that room is narrowing fast; remember, I’m in the U.S. and we are also seeing and feeling a thing or two regarding our own rising debt-to-GDP ratio.
And the PBO? You mean the Parliamentary Budget Officer, Canada’s official fiscal umpire, calculator-in-chief, and budgetary buzzkill, right! There’s just enough room to fund priorities, but not enough to absorb shocks without invoking the ghost of austerity past. The PBO’s warning, that well, it’s a credible warning that Canada’s fiscal path might be veering off-road. Call it fiscal drift. 2025–26 deficit is projected to soar, and the federal debt‑to‑GDP ratio is no longer forecasted to decline. New spending, weaker growth, tariff and trade tension with us, I mean the U.S., underestimated liabilities, and debt service costs. Like I mentioned earlier, some parallels to your southern neighbor.
Jacobsen: Are insolvencies flashing red or just amber?
Schulman: I’d call it amber. You’re not in crisis mode, but consumer debt is high, real wages haven’t fully recovered, and interest costs still bite. Consumer filings rose quarter-over-quarter. Canadians juggling mortgages, BNPL I mean buy-now-pay-later debt, credit cards, rising grocery and utility bills, and car loans are not going bankrupt en masse, but many are spiritually insolvent although still hoping for another rate cut.
Jacobsen: Is primary issuance genuinely open? TSX is at record highs. A record Maple bond surge.
Schulman: It’s as open as a 24-hour Tim Hortons. The TSX hitting all-time highs has the IPO crowd buzzing, and Maple bond issuance is frothier than a Pumpkin Spice Latte. But let’s be real, this is probably a sentiment-driven rally, parallel to the U.S. markets and not a fundamentals love story. Issuers are sprinting through the window because they know it might close fast. If growth stutters, this party could turn Letterkenny real quick, going from polished and professional to deadpan and profanity-laced chirping in five seconds flat. By the way, I’ve enjoyed a ton of Letterkenny clips on YouTube in no particular order, so if you have any favorite episodes, or anyone wants to mention their fav episode in the comments, please do!
Jacobsen: How large are the trade-policy risks heading into the 2026 USMCA review?
Schulman: Big enough! If U.S. politics veers further into protectionism, Canada’s supply chains could be collateral damage. Auto, dairy, and digital trade are likely targets. Hope for the best but prep for otherwise. Canadian exporters should brace for volatility. The good news is that the review is not until July 2026, so the U.S. government shutdown should be over by then.
Jacobsen: Any risks for the loonie there?
Schulman: Oh yeah. The loonie could go from Ryan Reynolds charm to Ryan Reynolds Deadpool chaos real fast. The Canadian dollar lives at the intersection of rate differentials, oil, and trade risk. If CUSMA gets messy, capital could rerate Canadian assets, especially if rate differentials widen and oil stays moody. Please don’t be offended; everyone is trying to figure out the U.S. dollar too, which slid this year, has recently strengthened a fraction, and is still at the center of a tug of war amongst hedge funds. The loonie’s been relatively stable, but recession, trade drama, or any dovish BoC move could have it skating into sub-71 territory.
Jacobsen: Any final thoughts or summaries?
Schulman: For the average Canadian, this mix probably means mortgage relief is coming, just not fast; groceries won’t get cheaper on a weak loonie; and Tax-Free Savings Account (TFSA) portfolios are enjoying the rally until trade headlines throw a cross-check.
Jacobsen: Thank you for the opportunity and your time, Michael.
Schulman: Thank you for the opportunity to share financial thoughts with enough levity to keep it south of delusional and north of dour.
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