Read Between the Lines April 2026

Transcript

April didn’t bring the same shock factor as March—but it did confirm a shift.

After a month where geopolitics abruptly reshaped the market narrative, April was about digestion. Markets spent the month recalibrating to a world where inflation risks are rising again, rate cuts are less certain, and geopolitical instability remains a persistent overhang.

Let’s start with a recap of April.

Equity markets trended higher as investors became more desensitized to the closure of the Strait of Hormuz. The S&P 500 was up 9.4%, while the S&P TSX was up 2.7%. This has narrowed the gap of the US’s underperformance. Year to date the S&P 500 is up 4.3%, while the S&P TSX still leads, up 6.1%. Interest rates were quiet and boring. The Canadian 10 year trended from 3.47% to 3.55%, while the U.S. 10 year moved sideways from 4.32% to 4.39%. Not much to call home about. Staying on the interest rate theme, both the Bank of Canada and the U.S. Federal Reserve held their rate decision meetings last week. Both kept their overnight rates unchanged at 2.25% here in Canada, and 3.75% in the U.S. Last, but certainly not least, the roller coaster ride that is oil prices continued through April. The top of the range in March was just north of $110 WTI, while the bottom of the range has been $84 a barrel. We’re currently trending back towards the top of the range at $106. To be sure, Oil has been range-bound, but we’re not talking about an ordinary range, this one is wide and volatile.

Within this landscape, how has Matco’s investment platform performed year to date?

• Matco’s Opportunities Strategy is up15.8%
• Matco’s Global Equity is up 6.4%
• Matco’s Canadian Equity Income Strategy is up 5.2%
• Matco’s Balanced Strategy is up 4.5%
• While Matco’s Diversified Income Strategy is up 0.3%

Each strategy is in second quartile or better in their respective categories, with 4 out 5 of them being in first quartile. All in all, we’re pleased with how our process is driving the platform’s results.

Now let’s dive into the headlines and developments that drove these market moves.

Following the sharp escalation in March surrounding Iran and the resulting surge in energy prices, April was defined by stabilization—but at elevated levels. As mentioned, oil remains near the top end of the range, and while the immediate panic around supply disruption eased somewhat, the market continues to price in a structural risk premium tied to the Strait of Hormuz.

That matters, because energy is no longer just a headline—it’s feeding directly into the broader inflation narrative. Which brings us to the most important development in April: inflation expectations have stopped improving.

After a multi-month trend of declining inflation data through late 2025 and early 2026, the progress has clearly stalled. In some cases, we’re beginning to see signs of re-acceleration, particularly in energy-sensitive components.

As a result, expectations for central bank policy continued to shift. What started in March as a repricing became more firmly embedded in April. The view that central banks would move quickly to ease policy has largely been replaced with a more cautious stance.

Both the Bank of Canada and the Federal Reserve reinforced this message. The tone has shifted from “when” cuts will happen, to “if” conditions will allow it. Central banks remain data-dependent, but the hurdle to cut rates has clearly moved higher, and the possibility of rates increasing is now real. As mentioned, both North American central banks left rates unchanged at their April 29th meetings. Notably, Prime Minister Mark Carney also announced the creation of a Canadian Sovereign Wealth Fund- The Canada Strong Fund. With an initial federal contribution of $25 billion, the Fund will strategically invest, alongside the private sector. Little details beyond that have been released, but a development we’ll continue to watch as it unfolds.

In practical terms, the “higher for longer” rate environment is no longer just a risk—it’s increasingly becoming the base case.

Equity markets reflected that uncertainty.

After March’s sharp drawdown, April saw better performance across regions and sectors. Broad indices attempted to stabilize, but beneath the surface, the rotation we highlighted last month continued to take shape.

Leadership remains in flux.

Energy and materials continued to benefit from the commodity backdrop, while industrials held in relatively well. Defensive sectors like utilities and consumer staples also saw steady demand as investors looked for stability.

Meanwhile, areas that had led markets over the past year—particularly large-cap technology—struggled to regain momentum. This isn’t necessarily a collapse in fundamentals, but rather a recalibration of valuations in a world where interest rates may stay elevated for longer than previously expected.

In other words, the market is becoming less concentrated—and more balanced.

Commodities remained a central driver through April, although with less volatility than in March. We’ve already touched on oil, but precious metals continued to show sensitivity to both real rates and positioning. The extreme moves we saw previously began to moderate, but the broader message remains intact: commodities are once again a meaningful force in asset allocation decisions.

At the same time, the growth outlook continues to soften at the margin.

Higher energy prices, combined with still-restrictive monetary policy, are creating a more challenging environment for both consumers and businesses. While we’re not seeing a sharp deterioration in economic data, the direction of travel is clear—growth expectations are gradually being revised lower.

This leaves us in a more complex environment.

On one hand, inflation risks are re-emerging. On the other, growth is losing some momentum. It’s not a full stagflation scenario, but the balance of risks is becoming less favourable than it was just a few months ago.

And importantly, the drivers of markets have changed.

We’ve moved further away from the clean, predictable narrative of rate cuts, and tech-led leadership. In its place is a more fragmented environment—one influenced by geopolitics, energy markets, and a broader set of economic drivers.

Periods like this tend to challenge concentrated positioning and reward properly built portfolios. They also tend to produce more volatility—but with that, more opportunity for disciplined investors willing to look beyond short-term noise.

With that in mind, how did Matco adjust our portfolios?

In Matco’s Global Equity Strategy, we removed a technology name from the portfolio, while also trimming an energy holding. Both portfolio adjustments fall into the risk management category. The technology name had been underperforming, while the energy name had a strong run. Both prudent, for unique reasons to their business model and our investment thesis.

The Opportunities Strategy was quite active in April. We invested in Blackline Safety, a local Calgary company that specializes in worker safety technology, back in January 2024. The company was acquired by a leading technology investment firm, Francisco Partners. Our process around acquisitions is to avoid deal risk, so once the deal was announced at a 30% premium, we exited the position which had more than doubled within our portfolio. Further highlights were the addition of a private global real estate technology company; the addition of a transport technology company focused on roadway tolling systems and the addition of a startup company in the defense industry. These three additions are private companies. On the public company side, the portfolio added a minerals exploration position and a defence company that came to market though an initial public offering. Lastly, we trimmed a Saskatchewan based energy holding, while completely removing a global gold company. Although the noise in markets remains high, opportunities are still present, when coupled with the proper due diligence.

In the Canadian Equity Income Strategy, activity was lighter. We removed Boyd Group, which has underperformed in the portfolio, while utilizing the proceeds to add to a portfolio company in the asset management sector.

If you recall from March, Matco’s Diversified Income strategy was active, primarily through a butterfly trade. This portfolio adjustment increased our concentration in the 8- and 9-year part of the yield curve and has performed well. In April, there was no activity to speak of, as new issuance in the market was on the lighter side.

Last, but certainly not least, within Matco’s Balanced strategy, we added to our position in the CMLS mortgage solution. This addition will take us closer to our 3% position target. The CMLS mortgage solution delivers yield in the mid 7% range, with very low volatility. Stability and income are valuable in this environment.

We spent the month of April in the cockpit, making subtle course corrections to keep portfolios on a steady flight path. Despite the pace, I did manage to get through another monthly read.

In April, I revisited The Essays of Warren Buffett: Lessons for Corporate America—written by Lawrence A. Cunningham. I tend to come back to this book every 3–5 years. It’s not exactly a page-turner, as it reads more like a well-organized textbook than a traditional narrative, but that’s part of its value. The essays distill decades of thinking from Warren Buffett on capital allocation, corporate governance, and long-term investing, all grounded in clear, rational decision-making. What stands out each time I pick it up is how timeless and consistent the principles are—focus on quality businesses, think like an owner, avoid unnecessary complexity, and let long-term compounding do the heavy lifting. It’s a practical, no-nonsense refresher that reinforces what discipline investing looks like.

One of my top anecdotes from the book: “Time is the friend of a wonderful business and the enemy of a mediocre one…You can’t turn a toad into a prince just by kissing it.”

The point is simpler than the metaphor. Buffet prefers buying high-quality businesses at reasonable prices than investing in weak ones and then trying to fix them. It’s a reminder that selecting your investments matters more than optimism in outcomes. It’s worth mentioning that these high-quality businesses must be accompanied by best-in-class management teams, who have proven to be strong allocators of capital.

If you’re a sophisticated investor, accountant, aspiring investment professional or just have a keen interest in deep business thinking…this book is a must. If you’re less inclined to look under the hood and uncover what works when it comes to business and long-term investing, take a pass on this one. Overall, I gave it a 9.2 out of 10. There’s a reason I’ve read it four times now. That said, it’s not for everyone. As a teaser for next month’s read, I’ve received a book recommendation. In fact, he delivered it to me personally. Though I haven’t started it yet, I’ve been told it focuses on how the private sector stepped into public service during wartime. Very much looking forward to it.

That’s it for this month’s edition of Read Between the Lines. Stay tuned for next month and happy reading.

Receive The Matco Note—our monthly market thinking. Unsubscribe anytime.