What Matters Today
1
Senate Votes Overnight to Fund Most of DHS After 42-Day Shutdown — TSA Finally Paid, $1 Billion in Unpaid Payroll, 480 Officers Quit
Senate Votes Overnight to Fund Most of DHS After 42-Day Shutdown — TSA Finally Paid, $1 Billion in Unpaid Payroll, 480 Officers Quit
The Senate unanimously approved funding for most of the Department of Homeland Security in an overnight vote after a 42-day standoff — the longest DHS funding lapse in the agency’s history. This USA & Canada intelligence brief tracks a breakthrough that ends the immediate crisis but leaves immigration enforcement unfunded and the House vote uncertain.
The measure funds TSA, the Coast Guard, FEMA, and most DHS operations but excludes Immigration and Customs Enforcement and parts of Customs and Border Protection. Democrats secured no new limits on immigration enforcement; Republicans got no ICE funding. Neither side won. The bill now goes to the House, where Speaker Johnson told reporters “we’ll have to see” — not a commitment to bring it to the floor. Conservative Republicans want full ICE funding and have vowed to block any piecemeal approach.
The human cost was staggering: TSA testimony to Congress revealed nearly $1 billion (~R$5.7 billion) in unpaid payroll, 480+ officers who quit, 40% callout rates at some airports, and officers selling plasma to survive. Acting TSA Administrator Ha Nguyen McNeill warned of potential airport closures. Trump declared a national emergency Thursday to pay TSA agents, using funds from the One Big Beautiful Bill Act — a legal mechanism whose constitutionality will be tested.
The DHS shutdown has been running in parallel with the conflict — a domestic governance failure occurring simultaneously with the largest US military deployment since Iraq. The Pentagon’s $200 billion (~R$1.14 trillion) supplemental request for costs sits in the same Congress that couldn’t fund airport security for 42 days. For Latin American investors watching US governance capacity, the juxtaposition is the story.
2
Brent Back Above $110 — S&P Hits 7-Month Lows, 5th Straight Losing Week (Worst Streak Since 2022), Markets Pricing Escalation
Brent Back Above $110 — S&P Hits 7-Month Lows, 5th Straight Losing Week (Worst Streak Since 2022), Markets Pricing Escalation
Brent crude climbed back above $110 per barrel (~R$628) on Friday as stocks slid again, with the S&P 500 hitting nearly seven-month lows. Major indexes are on pace for the fifth straight losing week — a streak last achieved during 2022’s miserable market year. The Nasdaq entered correction territory Thursday with a 2.4% drop, the biggest daily decline since the conflict began.
US 10-year Treasury yields are approaching 4.5% — nine-month highs driven by inflation fears and soft demand at Treasury auctions all month. Schwab noted that “participants want higher yields to take on US debt, possibly due to anticipated costs that threaten to raise a US debt approaching $40 trillion (~R$228 trillion).” The real-world impact: 30-year mortgage rates touched 6.5% (up from 6% a month ago) and weekly mortgage applications fell 10%.
Tomorrow’s deadline is the binary catalyst. Trump gave until April 6 for negotiations before threatening power plants, but the original 5-day postponement expires Saturday March 28. If ceasefire talks fail over the weekend, Monday’s market open faces Brent above $110, yields at 4.5%, and no floor under equities. The fifth straight losing week becomes the baseline, not the anomaly.
For Latin American markets, the transmission is direct. When US 10-year yields approach 4.5%, every emerging market bond spread widens. When Brent exceeds $110, every oil-importing Latin American economy’s fiscal arithmetic deteriorates. When the S&P enters its worst streak since 2022, risk appetite for EM assets evaporates. As noted in our previous USA & Canada intelligence brief, the US market decline is now the dominant external variable for Latin American portfolio flows.
3
Q4 GDP Revised Down Sharply to 0.7% — Exports Collapsed, Consumer Spending Weaker Than Reported, Stagflation Risk Rising
Q4 GDP Revised Down Sharply to 0.7% — Exports Collapsed, Consumer Spending Weaker Than Reported, Stagflation Risk Rising
The Commerce Department’s second estimate slashed Q4 2025 GDP growth to 0.7% annualised from 1.4% initially reported — halving the figure. The biggest downward revision was to exports, which fell to -3.3% (from -0.9%). Consumer spending was revised lower to 2.0% (from 2.4%). The government shutdown shaved 1.16 percentage points from the quarter.
The revision is devastating because it rewrites the narrative of the US economy entering 2026. Q3 was 4.4% — an acceleration that suggested resilience. Q4 at 0.7% reveals that the economy was already decelerating sharply before the conflict began. “The big downward revision in GDP is a gut check going into this energy crunch, increasing the risk of stagflation,” warned David Russell, global head of market strategy at TradeStation.
Carson Group’s Sonu Varghese was blunt: “This is only going to head higher as the energy shock comes through. An already large headache for the Federal Reserve is going to turn into an even larger one, and it’s likely the Fed will not cut rates in 2026 and may even start talking about rate hikes later this year.” The Fed’s own March meeting projected PCE inflation at 2.7% for 2026 — but that was calculated before Brent crossed $110.
The US economy entered 2026 growing at 0.7%, not 1.4%. That baseline matters for everything: fiscal revenue projections, deficit forecasts, the Fed’s rate path, and the Pentagon’s ability to fund a $200 billion supplemental without blowing through debt ceilings. When the starting point is weaker than assumed, every downstream calculation changes.
4
Fed Governor Waller Bombshell: US Payrolls Fell in 2025 — “One of the Weakest Years in Decades Outside a Recession”
Fed Governor Waller Bombshell: US Payrolls Fell in 2025 — “One of the Weakest Years in Decades Outside a Recession”
Fed Governor Christopher Waller revealed that after annual revisions, 2025 was “one of the weakest years in decades outside of a recession” for US employment. The revised data showed only 181,000 total new jobs for the entire year — an average of just 15,000 per month. Waller noted that even after revisions, an upward bias likely remains, meaning “payroll employment in the United States probably fell in 2025, only the third year that has happened, unrelated to a recession, since 1945.”
The revelation changes the employment picture completely. Throughout 2025, monthly reports suggested moderate job creation. The annual revisions exposed that the labour market was far weaker than real-time data indicated. Small firms employing 1-49 workers shed 120,000 jobs in November alone, while larger employers added workers — the K-shaped economy deepening.
Retailers report a sharp divergence: the top 20% of households (accounting for 35% of spending) remain resilient, supported by stock market wealth. The bottom 60% (accounting for 45% of spending) own only 15% of stocks and are “making more frequent trips to stores with fewer purchases during each visit.” US Bank has labelled this the “K-economy” — the top arm rising, the bottom arm falling.
For Latin American exporters to the US, the employment weakness translates directly into demand weakness. When the bottom 60% of US consumers pull back, they cut discretionary spending first — and Latin American agricultural exports (coffee, fruit, avocados) are among the first categories affected. The K-economy is not just a US domestic story; it’s a demand signal for every country that sells to American consumers.
5
Ontario Budget: Deficit Nearly Doubles to C$13.8 Billion — Ford Government Models US Withdrawal from CUSMA as Plausible Scenario
Ontario Budget: Deficit Nearly Doubles to C$13.8 Billion — Ford Government Models US Withdrawal from CUSMA as Plausible Scenario
Ontario’s projected deficit for 2026-27 nearly doubled to C$13.8 billion (~$10 billion / ~R$57 billion) as Finance Minister Peter Bethlenfalvy outlined a budget dominated by global trade tensions. Critically, the Ford government modelled a scenario in which the United States withdraws from CUSMA entirely — reducing Ontario’s projected growth from 1.0% to 0.3%.
Bethlenfalvy acknowledged: “When we locked in the budget, there was no conflict in the Middle East, and that level of global conflict. Geopolitical forces that may have once felt distant have now reached our shores.” The CUSMA withdrawal scenario assumes the US imposes 12% tariffs on all Canadian goods while maintaining existing sector-specific tariffs — a worst case that would devastate Ontario’s auto, steel, and aluminum sectors.
The budget identified AI as “a significant economic opportunity” — allocating C$107 million (~$78 million) over three years for Ontario’s Critical Technology Initiatives Programme. But the risk assessment also warned that AI prospects may not be “as promising” as expected. Canada’s premiers are simultaneously huddling in Ottawa for two days of emergency coordination on trade, energy, and defence — with the CUSMA review looming over every conversation.
Ontario is Canada’s largest province by GDP and the heart of its manufacturing economy. When Ontario models CUSMA collapse as a plausible budget scenario, it signals that Canada’s most economically significant government considers the trade relationship with the US fundamentally at risk. As our Global Economy Briefing noted, the CUSMA review is the most consequential trade negotiation in the Americas in 2026.
6
Hanwha Signs Submarine Deal with Canada — South Korean Defence Firm Deepens North American Footprint
Hanwha Signs Submarine Deal with Canada — South Korean Defence Firm Deepens North American Footprint
South Korea’s Hanwha announced a submarine deal with Canada, marking the Korean defence giant’s deepest penetration into North American defence procurement. Hanwha already produces the K9 howitzer (sold to 11 countries) and is partner on the KF-21 fighter programme — the submarine contract adds naval capability to a portfolio that now spans land, air, and sea across three continents.
The deal reflects Carney’s pivot toward defence spending. Canada has signalled it is looking to “join the major European military buildup by July 1” — a commitment that requires procurement decisions now. Hanwha’s submarine capability (the Chang Bogo-III class) offers a proven platform at a price point below European competitors like Germany’s TKMS or France’s Naval Group.
For Latin American defence procurement, the Hanwha-Canada deal confirms that Korean defence firms are now competing directly with European incumbents in Western allied markets. Brazil, Colombia, Chile, and Peru all have submarine programmes or aspirations. When Canada selects a Korean platform over European alternatives, it validates the Korean model for every Allied navy — and creates a precedent that Latin American defence ministries can cite.
7
Canada’s Population Posts Largest Decline Since 1946 — Immigration Reversal Hits BC Rental Market, Alberta Insulated
Canada’s Population Posts Largest Decline Since 1946 — Immigration Reversal Hits BC Rental Market, Alberta Insulated
RBC Economics reported that Canada’s Q3 population decline was the largest since 1946 and only the second ever recorded, as the federal government’s immigration reversal took effect. British Columbia, which relied heavily on temporary residents as a growth engine, is already seeing population outflows weighing on its rental market.
The geographic divergence is striking: Alberta and Saskatchewan will grow “far more than the national average,” supported by energy infrastructure and agricultural output. Ontario and Quebec — the trade-exposed provinces — face the double shock of CUSMA uncertainty and population decline. BC faces the triple shock of population outflows, a collapsing rental market, and Chinese tariff retaliation on agricultural exports.
Canada’s population reversal is the most significant demographic shift in the G7. After years of immigration-driven growth that masked per-capita GDP decline, the reversal exposes structural weaknesses: housing construction geared for population growth that is no longer coming, services employment dependent on consumer volumes that are shrinking, and a healthcare system designed for an expanding population now serving a contracting one.
Market Snapshot
| INSTRUMENT | LEVEL | MOVE | NOTE |
| S&P 500 | ~5,480 | ▼ 7-month low; 5th straight losing week | Worst streak since 2022; Q4 GDP halved to 0.7%; Brent $110; tomorrow’s deadline |
| Nasdaq | ~17,100 | ▼ correction territory (-2.4% Thu) | Biggest daily drop since conflict began; AI spending questioned post-tariff ruling |
| Brent Crude | $110+ | ▲ back above $110 | Hormuz + Panama dual chokepoint stress; California $9 gas; fertilizer +30% |
| US 10Y Treasury | ~4.50% | ▲ 9-month high | Soft auction demand; $40T debt; $200bn supplemental; inflation fears |
| 30Y Mortgage | 6.50% | ▲ from 6.0% one month ago | Mortgage apps -10% last week; housing affordability crisis compounding |
| DXY (Dollar) | ~104.5 | ▲ safe haven bid | Dollar strength crushing EM currencies; CAD weakening on CUSMA risk |
| TSX (Canada) | ~23,800 | ▼ -0.8% | Ontario deficit doubled; CUSMA withdrawal modelled; Hanwha sub deal; population decline |
| USD/CAD | ~1.38 | CAD weakening | BoC 2.25%; CUSMA uncertainty; energy windfall vs trade shock divergence |
| Fed Funds | 3.50-3.75% | Unchanged (March) | 7 of 19 FOMC see no cuts in 2026; rate hikes now discussed; Powell term May 15 |
| WTI Crude | ~$105 | ▲ following Brent | Alberta windfall; Keystone XL as trade leverage; fertilizer crisis at spring planting |
Conflict & Stability Tracker
Critical
US Governance Under Dual Strain — DHS Shutdown + $200bn Supplemental
Congress couldn’t fund airport security for 42 days while simultaneously debating a $200 billion emergency supplemental for military operations. The overnight DHS vote is a partial resolution — TSA gets paid, but ICE doesn’t get funded, the House hasn’t voted, and the supplemental debate is pushed to April. The governance capacity gap between what the conflict demands and what Congress delivers is widening. Treasury auctions showing soft demand for US debt at 4.5% yields confirms that bond markets see the fiscal trajectory as unsustainable.
Critical
K-Shaped Economy + Energy Shock = Stagflation Risk
Q4 GDP halved to 0.7%. Payrolls fell in 2025 (only the 3rd time since 1945 outside recession). Small firms shed 120K jobs while large firms added. The top 10% hold more wealth than the bottom 90% combined. Now layer Brent at $110, fertilizer +30%, California gas at $9, and mortgage rates at 6.5%. The bottom 60% of consumers — who account for 45% of spending but own 15% of stocks — are the transmission mechanism from energy shock to demand collapse. The K-economy is about to become a stagflation economy.
Tense
CUSMA as “Zombie” — Ontario Models Full Collapse
Eurasia Group called CUSMA “neither fully dead nor alive.” Ontario’s budget models US withdrawal as a plausible scenario — growth crashing from 1.0% to 0.3%. The CUSMA review begins in the summer with the Section 122 exemption expiring July 24. Canada’s premiers are huddling in Ottawa; Alberta’s MP Hogan says Keystone XL is being used as leverage in trade talks. The entire Canada-US trade architecture rests on an exemption that both sides can revoke with six months’ notice.
Watching
Canada’s Population Reversal — Largest Decline Since 1946
After years of immigration-driven growth that masked per-capita GDP decline, Canada’s population posted its largest quarterly decline since 1946. BC’s rental market is already falling as temporary residents leave. Alberta and Saskatchewan are insulated by energy. Ontario and Quebec face the double shock of CUSMA uncertainty and population decline. Hanwha’s submarine deal and Carney’s defence spending pivot (joining European buildup by July 1) are the only growth vectors visible in a contracting demographic landscape.
Fast Take
DHS
A Senate that couldn’t fund airport security for 42 days is now being asked to approve $200 billion for operations overseas. TSA officers were selling plasma to survive. 480 quit. 40% callout rates. The overnight vote funds most of DHS but not immigration enforcement — meaning the political fight that caused the shutdown hasn’t been resolved, just postponed. The House hasn’t voted. Johnson won’t commit. The same Congress that produced this dysfunction is supposed to debate the supplemental next month. Markets see this: Treasury auction demand is soft at 4.5%, and that’s before the supplemental bill arrives.
Markets
Five straight losing weeks is a market telling you it doesn’t believe peace is coming. The S&P at 7-month lows, the Nasdaq in correction, Brent above $110, 10Y Treasuries at 4.5%, mortgages at 6.5% — every major US financial indicator is flashing stress simultaneously. Tomorrow’s deadline is the fork. If ceasefire talks fail, the 2022 comparison stops being a streak count and becomes a structural analogy: the last time US markets fell for five straight weeks, they kept falling for months.
GDP
When your Q4 GDP gets halved from 1.4% to 0.7% in a revision, it means the economy was weaker than anyone thought going into the crisis. Exports collapsed. Consumer spending was revised lower. The government shutdown shaved 1.16 percentage points. Layer on $110 oil, 6.5% mortgages, and the Waller revelation that payrolls actually FELL in 2025, and the starting point for 2026 isn’t resilience — it’s fragility dressed up in lagging indicators that told the wrong story for months.
Canada
When Ontario models CUSMA collapse in its budget, it’s not scenario planning — it’s a warning shot. Canada’s largest province is telling markets, voters, and Washington that it considers the trade relationship fundamentally at risk. The deficit nearly doubled. Growth drops from 1.0% to 0.3% in the withdrawal scenario. Meanwhile, Canada’s population is posting its largest decline since 1946, BC’s rental market is collapsing, and the only provinces growing are energy-exporting Alberta and Saskatchewan. The country is splitting into two economies: one that benefits from oil at $105, and one that depends on a trade deal that may not survive 2026.
Defence
Hanwha selling submarines to Canada completes the Korean defence industry’s global breakout. K9 howitzers in 11 countries. KF-21 fighters rolling out. Now submarines in a NATO Five Eyes member. Korea has moved from regional arms supplier to global defence prime in under five years. Carney’s commitment to join Europe’s military buildup by July 1 requires procurement at scale — and Korean platforms deliver capability at 40-60% of the price of European competitors. For Latin American navies watching from Brasília, Santiago, and Lima, the precedent is set.
Developments to Watch
01
Tomorrow — Trump’s postponement expires (Saturday March 28). This USA & Canada intelligence brief’s most critical variable. Brent already above $110. S&P at 7-month lows. Treasury yields at 4.5%. If ceasefire talks fail, Monday’s open is catastrophic — the fifth losing week becomes the beginning of a sustained bear market.
Tomorrow — Trump’s postponement expires (Saturday March 28). This USA & Canada intelligence brief’s most critical variable. Brent already above $110. S&P at 7-month lows. Treasury yields at 4.5%. If ceasefire talks fail, Monday’s open is catastrophic — the fifth losing week becomes the beginning of a sustained bear market.
02
House vote on DHS funding bill — timeline uncertain. Johnson non-committal. Conservative Republicans want full ICE funding and may block. If the House doesn’t vote before recess, the partial resolution expires and the shutdown resumes. TSA agents were paid via national emergency declaration — the legal basis of which is untested.
House vote on DHS funding bill — timeline uncertain. Johnson non-committal. Conservative Republicans want full ICE funding and may block. If the House doesn’t vote before recess, the partial resolution expires and the shutdown resumes. TSA agents were paid via national emergency declaration — the legal basis of which is untested.
03
May 15 — Fed Chair Powell’s term expires. Warsh blocked by Sen. Tillis, attacked by Warren. Powell may stay as a governor (term runs to 2028) to preserve Fed independence. 7 of 19 FOMC members see no cuts in 2026. Rate hike talk is emerging from Carson Group and market strategists. The Fed leadership vacuum arrives at the worst possible moment.
May 15 — Fed Chair Powell’s term expires. Warsh blocked by Sen. Tillis, attacked by Warren. Powell may stay as a governor (term runs to 2028) to preserve Fed independence. 7 of 19 FOMC members see no cuts in 2026. Rate hike talk is emerging from Carson Group and market strategists. The Fed leadership vacuum arrives at the worst possible moment.
04
Summer — CUSMA review begins. Section 122 exemption expires July 24. Ontario modelling withdrawal. Premiers huddling. Keystone XL as leverage. Eurasia Group calls CUSMA “neither fully dead nor alive.” The review determines whether Canada’s effective US tariff rate stays at 5.9% or jumps to the full 35% blanket rate — the difference between growth and recession for Ontario and Quebec.
Summer — CUSMA review begins. Section 122 exemption expires July 24. Ontario modelling withdrawal. Premiers huddling. Keystone XL as leverage. Eurasia Group calls CUSMA “neither fully dead nor alive.” The review determines whether Canada’s effective US tariff rate stays at 5.9% or jumps to the full 35% blanket rate — the difference between growth and recession for Ontario and Quebec.
05
April — Pentagon $200 billion supplemental debate. Congress pushes the request to April. The same body that shut down DHS for 42 days must now approve the largest emergency military spending since Iraq. Soft Treasury demand at 4.5% yields signals that bond markets are already pricing the fiscal deterioration. The Supreme Court’s tariff ruling (broad tariffs illegal, $130 billion refund race) complicates revenue projections further.
April — Pentagon $200 billion supplemental debate. Congress pushes the request to April. The same body that shut down DHS for 42 days must now approve the largest emergency military spending since Iraq. Soft Treasury demand at 4.5% yields signals that bond markets are already pricing the fiscal deterioration. The Supreme Court’s tariff ruling (broad tariffs illegal, $130 billion refund race) complicates revenue projections further.
06
May — Trump-Xi summit. China launched two investigations into US trade practices Friday — signalling resolve ahead of the meeting. The Panama Canal ship detentions (70 vessels), the tariff ruling aftermath, and the CUSMA review all converge in a bilateral summit that determines trade architecture for the rest of 2026.
May — Trump-Xi summit. China launched two investigations into US trade practices Friday — signalling resolve ahead of the meeting. The Panama Canal ship detentions (70 vessels), the tariff ruling aftermath, and the CUSMA review all converge in a bilateral summit that determines trade architecture for the rest of 2026.
Sovereign & Credit Pulse
| COUNTRY | 10Y YIELD | KEY RATE | OUTLOOK |
| United States | ~4.50% ▲ (9-mo high) | 3.50-3.75% (hold) | GDP halved to 0.7%; payrolls fell 2025; $200bn supp; $40T debt; no cuts 2026; hike talk |
| Canada | 3.25% ▲ | 2.25% (BoC) | Ontario deficit doubled; CUSMA withdrawal scenario; population decline; AB/SK energy windfall |
Power Players
01
John Thune — Senate Majority Leader. Engineered the overnight DHS vote after seven failed attempts. Thune’s “last and final offer” — fund all of DHS except ICE enforcement and removal — split Democrats from their immigration enforcement demands while giving Republicans most of what they wanted. The deal paid TSA and Coast Guard but left the ICE funding fight for another day. Thune called Trump’s TSA executive order a “short-term solution” and told reporters “we’ll still have some work ahead of us.”
John Thune — Senate Majority Leader. Engineered the overnight DHS vote after seven failed attempts. Thune’s “last and final offer” — fund all of DHS except ICE enforcement and removal — split Democrats from their immigration enforcement demands while giving Republicans most of what they wanted. The deal paid TSA and Coast Guard but left the ICE funding fight for another day. Thune called Trump’s TSA executive order a “short-term solution” and told reporters “we’ll still have some work ahead of us.”
02
Christopher Waller — Fed Governor. His February speech revealing that US payrolls “probably fell in 2025” — only the third time since 1945 outside a recession — rewrote the employment narrative. Waller noted that small firms (1-49 employees) shed 120,000 jobs in November while large firms added workers. His assessment that 2025 was “one of the weakest years in decades” is the Fed’s own admission that the economy entered the crisis weaker than markets understood.
Christopher Waller — Fed Governor. His February speech revealing that US payrolls “probably fell in 2025” — only the third time since 1945 outside a recession — rewrote the employment narrative. Waller noted that small firms (1-49 employees) shed 120,000 jobs in November while large firms added workers. His assessment that 2025 was “one of the weakest years in decades” is the Fed’s own admission that the economy entered the crisis weaker than markets understood.
03
Peter Bethlenfalvy — Ontario Finance Minister. His budget modelling CUSMA withdrawal as a plausible scenario signals that Canada’s largest province considers the trade relationship with the US fundamentally at risk. The deficit doubling to C$13.8 billion reflects not just current conditions but expected deterioration. His acknowledgment that the budget was written before the conflict began, and that “geopolitical forces that may have once felt distant have now reached our shores,” captures the speed at which the external environment has overwhelmed domestic planning.
Peter Bethlenfalvy — Ontario Finance Minister. His budget modelling CUSMA withdrawal as a plausible scenario signals that Canada’s largest province considers the trade relationship with the US fundamentally at risk. The deficit doubling to C$13.8 billion reflects not just current conditions but expected deterioration. His acknowledgment that the budget was written before the conflict began, and that “geopolitical forces that may have once felt distant have now reached our shores,” captures the speed at which the external environment has overwhelmed domestic planning.
04
Mark Carney — Canada’s PM. Managing three simultaneous crises: the CUSMA review (Section 122 expires July 24), the population decline (largest since 1946), and the defence pivot (joining European buildup by July 1). Carney told CBC more progress is needed on tariffs “before we have the broader review of USMCA.” The Hanwha submarine deal and the Keystone XL leverage play are both Carney moves — using defence procurement and energy assets as trade negotiation chips.
Mark Carney — Canada’s PM. Managing three simultaneous crises: the CUSMA review (Section 122 expires July 24), the population decline (largest since 1946), and the defence pivot (joining European buildup by July 1). Carney told CBC more progress is needed on tariffs “before we have the broader review of USMCA.” The Hanwha submarine deal and the Keystone XL leverage play are both Carney moves — using defence procurement and energy assets as trade negotiation chips.
05
Mike Johnson — House Speaker. His non-committal “we’ll have to see” on the Senate DHS deal is the pivot point for whether the funding resolution holds or collapses. Conservative Republicans want full ICE funding. If Johnson doesn’t bring the Senate bill to the floor, the partial shutdown resumes, TSA agents go unpaid again, and the governance crisis deepens at the worst possible moment for US credibility.
Mike Johnson — House Speaker. His non-committal “we’ll have to see” on the Senate DHS deal is the pivot point for whether the funding resolution holds or collapses. Conservative Republicans want full ICE funding. If Johnson doesn’t bring the Senate bill to the floor, the partial shutdown resumes, TSA agents go unpaid again, and the governance crisis deepens at the worst possible moment for US credibility.
Regulatory & Policy Watch
01
Supreme Court tariff ruling — broad tariffs ruled illegal, $130 billion refund race underway. The Court determined that IEEPA did not authorise broad tariffs. The average tariff rate fell initially but Deloitte expects it to rise back to ~12% as the administration uses other statutes. The $130 billion refund race (WSJ) means companies are racing to reclaim duties paid under the illegal framework — a fiscal revenue hit that complicates every budget projection.
Supreme Court tariff ruling — broad tariffs ruled illegal, $130 billion refund race underway. The Court determined that IEEPA did not authorise broad tariffs. The average tariff rate fell initially but Deloitte expects it to rise back to ~12% as the administration uses other statutes. The $130 billion refund race (WSJ) means companies are racing to reclaim duties paid under the illegal framework — a fiscal revenue hit that complicates every budget projection.
02
Fed policy framework — 7 of 19 FOMC members see no cuts in 2026, rate hike talk emerging. The March meeting kept rates at 3.50-3.75%. PCE projected at 2.7% for 2026 — calculated before $110 Brent. Carson Group: “The Fed will not cut rates in 2026 and may even start talking about rate hikes later this year.” Powell’s term expires May 15. Warsh blocked. The Fed enters its most consequential policy period since 2022 with a leadership vacuum and an economy that’s weaker than any official dataset showed in real time.
Fed policy framework — 7 of 19 FOMC members see no cuts in 2026, rate hike talk emerging. The March meeting kept rates at 3.50-3.75%. PCE projected at 2.7% for 2026 — calculated before $110 Brent. Carson Group: “The Fed will not cut rates in 2026 and may even start talking about rate hikes later this year.” Powell’s term expires May 15. Warsh blocked. The Fed enters its most consequential policy period since 2022 with a leadership vacuum and an economy that’s weaker than any official dataset showed in real time.
03
CUSMA review framework — Section 122 exemption, Keystone XL leverage, China trade investigations. Canada‘s effective US tariff rate is 5.9% thanks to CUSMA exemptions. The review begins in summer with the Section 122 exemption expiring July 24. China launched two investigations into US trade practices Friday — signalling that the Trump-Xi May summit will be dominated by trade retaliation, not cooperation. Canada is caught between an unreliable US trade partner and a retaliating China.
CUSMA review framework — Section 122 exemption, Keystone XL leverage, China trade investigations. Canada‘s effective US tariff rate is 5.9% thanks to CUSMA exemptions. The review begins in summer with the Section 122 exemption expiring July 24. China launched two investigations into US trade practices Friday — signalling that the Trump-Xi May summit will be dominated by trade retaliation, not cooperation. Canada is caught between an unreliable US trade partner and a retaliating China.
04
Canada defence procurement and immigration policy — Hanwha submarines, European buildup, population reversal. Carney’s commitment to join Europe’s military buildup by July 1 requires procurement decisions now. The Hanwha submarine deal and the existing CF-18 replacement programme create a Canadian defence industrial base that didn’t exist five years ago. Simultaneously, the immigration reversal is producing the largest population decline since 1946 — a demographic shock that undermines the tax base, the housing market, and the healthcare system simultaneously.
Canada defence procurement and immigration policy — Hanwha submarines, European buildup, population reversal. Carney’s commitment to join Europe’s military buildup by July 1 requires procurement decisions now. The Hanwha submarine deal and the existing CF-18 replacement programme create a Canadian defence industrial base that didn’t exist five years ago. Simultaneously, the immigration reversal is producing the largest population decline since 1946 — a demographic shock that undermines the tax base, the housing market, and the healthcare system simultaneously.
Calendar
| DATE | EVENT | IMPACT |
| Mar 28 | Trump’s postponement expires (tomorrow) | Brent $110+; S&P 7-month lows; ceasefire or escalation; Monday open = the test |
| TBD | House vote on Senate DHS funding bill | Johnson uncommitted; conservative Rs want ICE; partial or full DHS resolution |
| Mar 31 | Consumer Confidence + Nike (NKE) earnings | Consumer bellwether; end-of-quarter window dressing; K-economy signal |
| Apr 1 | ISM Manufacturing PMI; ADP employment | First hard data with partial energy shock; manufacturing contraction expected |
| Apr 3 | March nonfarm payrolls (markets closed Good Friday) | Waller’s 2025 fall in payrolls — does March confirm the trend? Labour market test |
| May 15 | Fed Chair Powell’s term expires | Warsh blocked; leadership vacuum; Powell may stay as governor; independence at stake |
Bottom Line
The United States enters the weekend with Brent above $110, the S&P at seven-month lows, Treasury yields at 4.5%, and a Congress that took 42 days to fund airport security while debating a $200 billion military supplemental. The governance gap between what the crisis demands and what Washington delivers is now a market variable, not just a political observation.
The Senate’s overnight DHS vote is a partial resolution that creates new problems. TSA agents get paid, but ICE doesn’t get funded. The House hasn’t voted. Johnson won’t commit. Conservative Republicans want full immigration enforcement funding. If the House doesn’t act before recess, the shutdown resumes. Trump’s national emergency declaration to pay TSA — using funds from the One Big Beautiful Bill Act — is legally untested and may face court challenge. The $200 billion supplemental debate pushed to April arrives in a Congress that has demonstrated it cannot resolve a $1 billion payroll crisis.
The market story is binary around tomorrow’s deadline. Five straight losing weeks (worst since 2022), Brent above $110, Nasdaq in correction, 10Y Treasuries at 4.5%, mortgage rates at 6.5% — every major indicator is pricing escalation risk. If Saturday produces a ceasefire framework, the relief rally could be violent. If it doesn’t, the S&P’s 7-month low becomes a support level that breaks, and the bear market comparison to 2022 shifts from analogy to forecast.
The economic foundation was weaker than anyone knew. Q4 GDP revised to 0.7% from 1.4%. Fed Governor Waller revealed payrolls probably fell in 2025 — only the third time since 1945 outside a recession. Small firms shed 120,000 jobs while large firms added. The K-shaped economy means the top 10% (holding more wealth than the bottom 90% combined) are insulated, while the bottom 60% are pulling back on spending, switching to cheaper goods, and absorbing the energy shock without the stock market wealth that cushions their wealthier neighbours.
Canada’s story is increasingly a tale of two countries. Ontario’s deficit doubles to C$13.8 billion and its government models CUSMA withdrawal as plausible — growth crashing from 1.0% to 0.3%. Population posts its largest decline since 1946 as immigration reversal hits BC’s rental market. But Alberta and Saskatchewan — the energy provinces — grow “far more than the national average” on $105 WTI. Hanwha’s submarine deal and Carney’s defence spending pivot add a third dimension: Canada as a defence procurement market that Korean and European firms are now competing for.
The Supreme Court’s tariff ruling (broad tariffs illegal), the $130 billion corporate refund race, and China’s Friday investigations into US trade practices together signal that the trade architecture of 2025 is being dismantled — legally, fiscally, and diplomatically. The CUSMA review begins in summer. The Trump-Xi summit comes in May. The tariff rate settles around 12% under new statutes. For every business and government in the Americas that depends on US trade policy predictability, the message is: there is no predictability. Plan accordingly.
For Latin American investors, this USA & Canada intelligence brief tracks a weekend that determines the quarter. If ceasefire talks produce a framework, the relief trade runs — equities rebound, Brent pulls back, Treasury yields stabilise, and EM assets catch a bid. If they don’t, the fifth losing week becomes the sixth, Brent stays above $110, yields push toward 5%, and the K-economy’s bottom 60% enter the kind of demand destruction that reduces imports from every trading partner, including Latin America. Tomorrow is the fork. Monday is the answer.