TSX Hits New All-Time High; Inflation Meets the Target
All-Time Highs vs. All-Time Costs
Welcome back! The third week of December ended on a historic note. The S&P/TSX Composite Index surged to a new all-time record high on Friday, closing at 31,755.77. While the headline news was a 'Santa Rally' into record territory, the fuel behind the move was Monday's critical inflation data.
Inflation is finally behaving, but as anyone who did a grocery run this week knows, the "all-items" number doesn't tell the whole story.
Here is the full breakdown of the major economic and market events for Dec 15–19:
📈 The Daily Market Flow
Monday, Dec 15: (Down 0.14%) The market reacted coolly to the CPI release; while inflation met targets, the spike in food prices sparked consumer spending concerns.
Tuesday, Dec 16: (Down 0.7%) Broad-based selling as investors digested the "higher-for-longer" implications of sticky core inflation measures.
Wednesday, Dec 17: (Down 0.04%) Financial stocks pulled the index lower, offsetting minor gains in the energy sector.
Thursday, Dec 18: (Up 0.61%) Sentiment shifted as U.S. markets rallied; the TSX followed suit, breaking its three-day losing streak.
Friday, Dec 19: (Up 1%) A strong tech-led rally pushed the TSX to a weekly gain, closing near its second-highest value of the year.
🇨🇦 Inflation Breakdown: Headline vs. Reality
On Monday, December 15th, Statistics Canada released the November CPI report. It was the "Line in the Sand" we were waiting for.
The Number: Headline inflation stayed steady at 2.2% (YoY), matching October’s pace. This was slightly lower than the 2.3% economists expected.
The "Core" Victory: For the first time since the American tariff campaign began earlier this year, the Bank of Canada’s preferred "core" measures (CPI-trim and CPI-median) both fell below 3%, landing at 2.8%.
The Grocery Shock: While the headline looks calm, grocery prices jumped 4.7% (the highest since late 2023). Beef prices are up a staggering 17.7%, and coffee has surged 27.8% due to weather and trade tariffs.
The Takeaway: The Bank of Canada finally has the "core" cooling it wanted, which justifies their recent rate hold. However, the surge in non-discretionary costs (food) means consumers have less "fun money" for the holidays.
📊 Economic Snapshot: Beyond the Ticker
🚘 ZEV Registrations (Down 40.1%)
New battery-electric vehicle (BEV) registrations plummeted 52.3%in Q3 compared to last year. Even with recent rate cuts, the "all-in" cost of financing a $60,000+ EV is proving too steep for the average household.
In a complete "flip" from 2024, full hybrids now outsell the entire ZEV (Zero-Emission Vehicle) segment. Hybrid registrations jumped 29.3%, capturing 12.4% of the total market.
Consumers aren't giving up on fuel efficiency; they are trading down for affordability. In a high-interest environment, the lower sticker price of a hybrid (combined with zero "range anxiety") is winning the battle for the Canadian driveway.
🌏 Foreign Investment (+$46.6 Billion)
Foreigners added a massive amount of Canadian securities in October, showing that while we are cautious at home, the world still sees Canada as a safe haven.
⚒️ Manufacturing Revenue (Down 0.9%)
2024 data (just released) shows the first revenue decline in three years, led by a slump in transportation equipment.
📅 Looking Ahead: The 2026 Horizon
With the final full trading week of 2025 behind us, the market is now pricing in a prolonged hold at 2.25%. The TSX's climb to record heights on Friday suggests that investors have accepted the BoC’s "wait-and-see" stance as a sign of stability rather than stagnation.
The "Santa Rally" is officially here, but the shadow of 2026 looms. All eyes are now on the USMCA renegotiations slated for this summer and whether the recent cooling in core inflation can survive the ongoing structural shifts in global trade.
In summary, the week provided the "inflation holiday cheer" the BoC needed to stay on the sidelines. We are entering the new year with a stable rate environment, but a much more expensive grocery basket.
As you head into the final week of the year, it’s a great time to rebalance your investments. Are you overweight in "Trade-Down" winners or stuck in high-CapEx tech?