USA & Canada Intelligence Brief — Wednesday, May 27, 2026
Executive Summary
Ken Paxton routed John Cornyn by more than 25 points in the Texas Senate runoff, ending a 24-year career and signalling the MAGA grip on the GOP. Kevin Warsh has opened his Fed chairmanship
Ken Paxton routed John Cornyn by more than 25 points in the Texas Senate runoff, ending a 24-year career and signalling the MAGA grip on the GOP. Kevin Warsh has opened his Fed chairmanship ahead of the June FOMC. Thursday’s PCE and GDP data loom over a market with Treasury yields near a 16-month high. The Bank of Canada is holding a patient stance as energy provinces outperform. Today’s USA and Canada intelligence brief covers the finance, markets, economy, and politics tape.
United States — Politics
Paxton Routs Cornyn by 25+ Points in Texas Senate Runoff
Ken Paxton defeated incumbent John Cornyn by more than 25 points in the Republican Senate runoff. The AP called it almost immediately after polls closed.
Cornyn’s 24-year Senate career ends in January, despite his voting record aligning almost perfectly with Trump. The result confirms that party loyalty alone no longer secures a Republican primary.
Trump Endorsement “the Most Powerful Force in Politics”
Paxton credited Trump’s endorsement, issued seven days before the runoff, as decisive. He called it “the most powerful force in politics.”
Paxton now faces Democrat James Talarico in November. National Republicans had warned that Paxton’s scandals make the seat more competitive in the general election.
United States — The Fed
Warsh Opens His Chairmanship Ahead of June FOMC
Kevin Warsh has taken the oath as Fed chairman, and the FOMC unanimously selected him as chair. He inherits a committee fractured by 2025’s dovish-hawkish divisions.
Analysts expect those divisions to persist into the first half of 2026. The tension between a dovish bias and a hawkish undertone defines the Warsh-era starting point.
Markets Price Roughly Two Cuts
Markets are pricing roughly two 25bp cuts for the year, contingent on the data. The economy has defied expectations, with growth holding up while inflation stays sticky and the labour market cools.
United States — Data & Markets
PCE and GDP Loom Thursday
The Fed’s preferred inflation gauge, core PCE, is released Thursday alongside the second GDP read. Core PCE is running near 3%, not expected to reach the 2% target until Q4 2027.
The prints are the most consequential macro inputs for the Warsh-era June FOMC. Sticky inflation against a cooling labour market is the central dilemma.
Treasury Yields Near 16-Month High
The 10-year Treasury yield briefly touched a 16-month high mid-week. Rising yields are dragging mortgage rates higher and weighing on home sales and construction.
FOMC minutes from the April meeting showed an increasingly hawkish committee amid rising inflation pressures. The Iran war’s energy pass-through is the upside-inflation risk.
Canada — Monetary Policy
Bank of Canada Holds a Patient Stance
The Bank of Canada is holding at its estimated neutral rate of 2.25% after resuming cuts earlier in the cycle. Total inflation is near 2%, with underlying inflation around 2.5%.
Soft current inflation supports patience even as energy pass-through is expected to lift core inflation late in Q2. The economy is adjusting to US tariffs with modest growth.
Energy Provinces Outperform
Alberta, Saskatchewan, Newfoundland, and BC are forecast to outperform on higher energy prices. Oil importers Ontario and Quebec face a new headwind on top of trade friction.
Canada — Trade
Carney Intensifies US Trade-and-Security Talks
Prime Minister Carney has removed many retaliatory tariffs on US goods and is intensifying talks on a new trade-and-security partnership. The USMCA review is the looming structural event.
Canadian financial markets exhaled on constructive inflation developments and signs of a US-Iran deal nearing. The loonie is expected to return toward the 74-75 US-cent range.
Markets
US Equities and the Stagflation Watch
US equities traded against a sticky-inflation, cooling-labour backdrop that keeps the stagflation debate live. Thursday’s PCE and GDP are the week’s decisive catalysts.
The S&P 500 and Nasdaq tracked AI-sector momentum and the rate path. Rising long-end yields are the offsetting pressure on valuations.
The Read
Paxton routed Cornyn by 25+ points, ending a 24-year career and confirming the MAGA grip on the GOP heading into the midterms. Kevin Warsh opened his Fed chairmanship inheriting a fractured committee.
Thursday’s PCE and GDP data are the decisive catalysts for the Warsh-era June FOMC, with core PCE near 3% and Treasury yields at a 16-month high. The Bank of Canada is holding patient at 2.25% as energy provinces outperform.
Carney has removed many retaliatory tariffs and is intensifying US trade-and-security talks ahead of the USMCA review. US equities trade the stagflation watch.
What to Watch
- Thu · May 28 · PCE Price Index + second GDP read
- Jun 16-17 · FOMC June — first Warsh-chaired meeting
- Nov · Texas Senate general — Paxton vs Talarico
- Ongoing · Core PCE near 3% — 2% target not seen until Q4 2027
- Ongoing · 10-year Treasury near 16-month high — mortgage/housing drag
- Ongoing · Bank of Canada at neutral 2.25% — energy pass-through Q2
- Ongoing · USMCA review — Carney trade-and-security partnership talks
This article was produced by The Rio Times’ automated newsroom system. How we use AI · Report an error