Market Leadership

Canada Higher-for-Longer Rates: Implications Across Our Coverage Universe

By: Andrew Kelvin, Steven Green, Brian Morrison, Sean Steuart, Vince Valentini

Oct. 23, 2026 - 4 minutes

Canadian flags beside Parliament’s Peace Tower in Ottawa.

What You Need to Know:

Canadian bond yields have climbed as markets price higher-for-longer rates.
We expect less tightening than current market forecasts.
Real estate, telecom and utilities face the biggest rate headwinds.
Energy, mining, banks and insurers are better positioned.

The TD Cowen Insight

Longer-term interest rates have moved meaningfully higher in 2026, with Canadian 10-year government bond yields rising approximately 40bps year to date and global bond markets experiencing even larger moves.

While Canada has not participated directly in the latest round of policy tightening, markets are increasingly pricing a higher-for-longer rate environment as central banks remain focused on containing inflation, and global bond supply continues to put upward pressure on yields. Our Macro Research team believes that the market has gone too far in pricing tightening paths, and we are calling for just 50bps of tightening in Canada starting early-2027.

How Interest Rate Sensitivity Varies by Sector

The potential impact of higher interest rates differs considerably across industries. This report brings together the perspectives of TD Cowen's Canadian equity analysts on the implications for the sectors and companies under coverage. While a higher-rate environment is generally viewed as a headwind for equity valuation multiples due to higher discount rates and the increased relative attractiveness of risk-free assets, the fundamental impacts are often more nuanced and company specific. Themes such as the AI investment cycle, tariff developments, commodity price movements, government efforts to encourage investment in Canada and increased acquisition opportunities for well-capitalized consolidators may ultimately have more influence on company performance and equity returns than interest rates alone.

That said, if we isolate interest-rate impacts, sectors with significant leverage, long-duration assets, refinancing requirements or direct exposure to housing affordability generally face the greatest challenges. Those sectors include Forest Products, Power/Utilities/Renewable Independent Power Producers (IPPs), Real Estate, Telecommunications and Technology. Sectors with strong balance sheets, limited refinancing requirements or business models driven primarily by commodity prices and/or infrastructure investment face fewer challenges. Those sectors include Energy, Mining and portions of Industrials. Segments of Financials—particularly banks and insurers—may benefit from higher rates through stronger net interest margins and higher investment income as long as loan growth, capital markets revenue and credit are not adversely affected.

Subscribing clients can read the full report highlighting our Macro Research team's views, along with fundamental analysts' views on how rising bond yields affects their universe on the TD One Portal: Canada Higher-for-Longer Rates: Implications Across Our Coverage Universe

Disclaimer

The views or opinions expressed herein represent the personal views of the writer and do not necessarily reflect the views of TD Securities or its affiliates.

This material is intended to provide commentary on the market for commodities discussed herein.

Not Advice: The information contained in this material is for informational purposes only and is not intended to provide professional, investment or any other type of advice or recommendation, or to create a fiduciary relationship. Neither TD Securities (USA) LLC (“TD Securities USA”) nor any of its affiliates (collectively, “TD”) makes any representation or warranty, express or implied, regarding the accuracy, reliability, completeness, appropriateness or sufficiency for any purpose of any information included in this material. Certain information may have been provided by third-party sources and, while believed to be reliable, has not been independently verified by TD, and its accuracy or completeness acannot be guaranteed. You should not make an investment decision in reliance on this material, which is intended to provide only brief comments on the topics addressed, and is based on information that is likely to change without notice.

Not Securities or Derivatives Research: This material has not been produced, reviewed or approved by TD’s securities or derivatives research departments. The views of the author may differ from others at TD, including TD securities or derivatives research analysts. Not Independent: The views expressed in this material may not be independent of the interests of TD. TD may engage in conflicting activities, including principal trading before or after posting this material, or other services involving commodities discussed in this material, or related financial products. TD may have a financial interest in the commodities discussed in this material, including, without limitation, a financial product that references such commodities.

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Andrew Kelvin
Andrew Kelvin
Head of Canadian and Global Rates Strategy, TD Securities

Biography

Andrew is the Head of Canadian and Global Rates Strategy. In this role, Andrew contributes to the group’s economic commentary and advice on G10 government debt and rates markets. Prior to joining TD Securities in 2011, Andrew spent four years working at the Bank of Canada in the International and Financial Markets Departments. With our Credit Desk Strategy team, Andrew and his team were first ranked #1 in Greenwich Canadian FI Research Quality in 2021.

Steven Green, CFA
Steven Green, CFA
Director and Research Analyst, Gold & Precious Minerals, TD Cowen

Biography

Steven Green joined TD Cowen in 2002 and has been a precious metals analyst for over 20 years. Prior to entering the securities business, Steve gained diverse experience in the mining industry having spent 4 years working as a Mining Engineer at a gold mine, as well as working as an exploration geophysicist conducting exploration airborne geophysical surveys for mining companies around the world. Steve received his MBA from the Rotman School of Management (University of Toronto) in 2002, and received a Bachelor of Applied Science degree (Geological Engineering) from the University of Waterloo in 1998. Steve is a CFA® Charterholder.

Brian Morrison
Brian Morrison
Managing Director, Consumer Equity Research Analyst, TD Cowen

Biography

Sean Steuart
Sean Steuart
Managing Director, Paper & Forest Products Research Analyst, TD Cowen

Biography

Sean assumed the role of North American paper & forest products analyst in 2000 and has covered the Canadian renewable power sector since 2008. He now covers 14 equities across both sectors and has been consistently ranked as a TopGun analyst by Brendan Wood International, a global capital markets survey firm. Before joining TD Securities, Sean gathered extensive work experience at pulp and paper mills in Canada and the United States. Sean graduated from York University’s MBA program in 1998 and has an Honours Bachelor of Commerce degree from McMaster University. He is a CFA charterholder.

Vince Valentini
Vince Valentini
Managing Director, Equity Research, TD Cowen

Biography

Vince is a Managing Director in the Institutional Equities department of TD Cowen. Vince works in equity research covering telecom, cable & electronic publishing stocks. He has been covering the telecom and media industries as an equity research analyst since 1993. In 2006 and 2012, Vince was the number one ranked Telecom analyst in Canada and has consistently been ranked as one of the top four analysts of that sector. Vince also received the 2009 StarMine Canada Analyst Awards for Number 1 Stock Picker in both the Telecommunication and Media sectors and the 2010 StarMine Canada Analyst Award for Number 1 Stock Picker in the Telecommunication Sector.