Like last September, financial markets have high hopes for rate cuts and dovish comments from the US Fed and Bank of Canada today.

Futures markets are pricing 150 basis points of Fed cuts by the end of 2026 (taking Fed policy down to 2.75% to 3%) and 75 basis points from the Bank of Canada (reducing the BoC target to around 2%). But a lot can happen over the next 15 months.

Grossly inflated asset prices are extra vulnerable to any disappointments.

There’s no doubt that labour markets have weakened over the last year, but inflation readings remain above target.  Financial strife is spreading through the economy. Easing of the overnight rate will be welcomed by debtors, but not enough to remedy the insufficient income that’s ailing them.

As far as Canada’s ongoing housing debacle, supply is coming onto the market at more than double the rate of demand, with August new listings up +2.6% over July. Properties “For Sale” have risen 8.2% year over year.

Economically impactful, new housing starts tumbled 16.3% month over month in August to a five-month low of 245.8k units annualized, sharply below the consensus forecast of 280k units.

Meanwhile, financial undertakers remain in high demand. Insolvency Trustee Scott Terrio reports carnage from the front line.

The segments below offer context on similar trends in America.

Credit scores are falling at the fastest pace since the Great Recession as Americans struggle to keep up with the high cost of living and the return of student debt payments. The national average FICO score dropped by two points this year, the most since 2009, according to data released Tuesday by the analytics company. Although credit scores remain significantly higher than during the Great Recession, they are down for the second year in a row. FICO found a growing share of borrowers are falling behind on car loans, credit cards and personal loans. Here is a direct video link.

Consumer sentiment in the US is sliding to near historic lows as Americans grow increasingly frustrated with the economy. But don’t tell that to stock traders. The S&P 500 has hit four record highs this month. Here is a direct video link.