By Dean Brown.

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Good morning,

Diesel prices are surging, Canadian inflation numbers land this morning, global bond yields are elevated and investors are increasingly betting the U.S. Federal Reserve will raise interest rates this week.

At the same time, Mark Carney is gathering global investors in Toronto with one of the biggest economic targets his government has set yet:

$1 trillion of investment in Canada over the next five years.

For Canadians, all of this eventually comes back to the same question:

What happens to prices, borrowing costs and the economy from here?

The world doesn't appear to have a major shortage of crude oil alone.

It has a growing shortage of refined diesel.

Wars and refinery disruptions in Russia and the Middle East have removed roughly 4 million barrels per day of diesel supply, according to industry estimates reported by Reuters. Refineries elsewhere are already running near capacity, and diesel refining margins recently hit record levels. Read the Reuters breakdown of the diesel shortage

That matters because diesel runs through almost every physical part of Canada's economy.

Farms use it.

Trucks use it.

Mining and construction use it.

Food moves from farms to processors, warehouses and stores using it.

So the danger isn't simply expensive fuel.

It's the possibility that:

diesel → freight → food and goods → broader inflation.

Ottawa has already extended the suspension of the federal fuel excise tax through January 31, saving 4 cents per litre on diesel and 10 cents on gasoline. The government estimates total fuel-tax relief for 2026-27 at about $5.3 billion. See the federal fuel-tax extension

That helps.

But four cents is small compared with the size of the global diesel shock.

Statistics Canada releases August's Consumer Price Index this morning.

The headline number matters, but I’ll be paying even more attention to what is driving it.

If inflation rises mainly because fuel is expensive, the Bank of Canada may still view part of the increase as an energy shock.

If higher costs are spreading into groceries, transportation, manufactured goods and services, that becomes much harder to ignore.

And that's where diesel becomes important.

One expensive fuel bill is annoying.

Higher fuel costs working their way through the rest of the economy can influence interest rates, mortgages and household spending.

That's the bigger risk.

Mark Carney's first Canada Investment Summit takes place in Toronto today and tomorrow.

Ottawa's official goal is not vague: it says Canada wants to catalyze $1 trillion in total investment over the next five years.

The summit brings together global investors, Canadian CEOs and governments, and is being hosted with CPP Investments and PSP Investments, two of Canada's largest institutional investors.

The government is pitching projects in areas like:

energy

critical minerals

infrastructure

technology

manufacturing

The Major Projects Office already lists 27 nation-building initiatives representing more than $192 billion in investment and over 330,000 potential jobs. See Ottawa's current investment pipeline

But the $1-trillion headline needs context.

Carney isn't saying Ottawa is going to spend $1 trillion.

The idea is to attract much of that money from businesses, pension funds and global investors.

So the number worth watching isn't:

How many projects get announced?

It's:

How much private money actually gets committed?

The Bank of Canada held its policy rate at 2.25% earlier this month.

That doesn't mean fixed mortgage rates can't rise.

Canadian fixed mortgages are heavily influenced by bond yields, and Canadian yields jumped as oil moved back above US$100 and investors became more concerned about inflation. Reuters explains the recent Canadian bond move

Now the U.S. Federal Reserve meets Tuesday and Wednesday.

After stronger American inflation data, markets are pricing roughly an 87% chance of a quarter-point Fed rate increase this week. See the latest Fed expectations

Why should a Canadian care about an American rate decision?

Because U.S. rates affect global bond markets, currencies and borrowing conditions.

A Fed hike doesn't automatically increase your Canadian mortgage.

But if global yields keep moving higher, Canadian fixed rates can move with them.

Carney's investment pitch isn't happening in isolation.

Canada is also talking with Europe about a much deeper economic relationship.

Carney says Canada is not trying to join the European Union, but wants a new “unique alliance” that could make it easier to move goods, services and workers in strategic industries including energy, AI, defence and critical minerals.

That fits the same economic strategy we're seeing at the investment summit.

Canada still wants the U.S. market.

But Ottawa increasingly wants:

more investors

more customers

and more options.

Europe cannot replace America.

But economically, Canada doesn't need Europe to replace America.

It needs America to become less irreplaceable.

Canadian inflation

August CPI lands this morning.

Watch whether higher energy costs are spreading into food and other prices.

Canada Investment Summit begins

Carney starts pitching global capital on his plan to attract $1 trillion over five years.

Investment Summit concludes

I'll be watching for actual investment commitments, project announcements and which industries attract the most money.

Federal Reserve meeting begins.

Federal Reserve rate decision

Markets currently expect a rate increase. That could move the Canadian dollar, bond yields and eventually fixed mortgage rates.

Bank of Canada releases its Summary of Deliberations

At 1:30 p.m., we'll get more detail on what Canada's central bank was worried about when it held rates at 2.25%.

I'll be watching how markets digest everything:

oil

diesel

Canadian bond yields

the dollar

and any investment deals announced after the summit.

We'll bring this issue back.

Not another preview.

A scorecard:

What happened to inflation?

How much investment did Carney actually attract?

What did the Fed do?

What happened to mortgage pressure?

And is diesel getting better or worse?

That's the story I want this newsletter to become.

The headlines tell us what is moving.

The harder questions are:

Can diesel actually restart Canadian inflation?

Can Carney realistically attract $1 trillion while borrowing costs are rising?

What does Canada have to give investors to bring that money here?

And why can the Federal Reserve affect Canadian mortgages even when our own central bank does nothing?

That's what I'm digging into in today's Plus edition.

The biggest tension this week is pretty simple.

Canada wants more investment at exactly the same time global money is becoming more expensive.

Higher fuel prices can push inflation up.

Higher inflation can keep interest rates higher.

Higher rates make mortgages more expensive.

And those same higher rates make billion-dollar factories, mines and infrastructure projects harder to finance.

Carney wants Canada to build more.

The cost of doing that may be heading in the opposite direction.

That's what I'll be watching.

If Canada really attracts $1 trillion of investment, where would you want most of it to go?

Energy, manufacturing, infrastructure, mining or technology?

Hit reply and tell me why.

Until Tomorrow,

Dean