Greetings,

After trade negotiations collapsed on Friday, the US and Canada are escalating tariffs on each other -- now with much bigger implications and economic consequences. More on that below. 

Also in this edition:

• Treasury could tap $1T TGA to fund bond buybacks
• New PE venture embeds AI experts at portfolio companies
• How the Grant Thornton-CBIZ deal could reshape public accounting
• 24/7 digital perps trading could reshape markets

President Donald Trump has announced plans to double tariffs on Canadian automobiles and parts to 50% starting January 1, 2027. The current tariff rate is 25% but applies only to non-US content in vehicles. This increase follows the breakdown of recent trade talks with Canada and the implementation of 50% tariffs on a range of Canadian goods. The new auto tariffs would target both finished vehicles and parts, with significant implications for the industry, though it remains unclear how vehicles with substantial US content will be treated. Trump's move represents his most direct response to failed negotiations and is set to escalate trade tensions ahead of the 2026 midterms.

Blackstone and Hellman & Friedman have partnered with Anthropic to form Ode, a 160-person AI team aimed at enhancing portfolio companies. The $1.5 billion venture will focus on building new product lines and boosting revenue, rather than cost-cutting. Blackstone has already embedded Ode engineers at six of its portfolio companies, including the Chamberlain Group, which has seen significant growth in its digital-doorman business due to AI integration.

The Treasury could use its nearly $1 trillion Treasury General Account to fund its recently announced plans to increase purchases of government bonds, according to two senior Treasury officials. This could provide significant firepower to influence long-term bond yields. Treasury Secretary Scott Bessent had referred to the operation as a "Treasury Twist," implying the sale of short-term bonds to buy long-term ones.

Prediction market traders remain skeptical that efforts by Treasury Secretary Scott Bessent to cap rising yields will lead to a significant decline. Speculators on Kalshi see a 56% chance that the 10-year Treasury yield will end the year at or above 4.75%, while Polymarket traders place 2-to-3 odds that the yield will surpass 4.8% in 2026.

CFOs are deciding how to use unexpected cash from tariff refunds after the US Supreme Court struck down President Donald Trump's tariffs earlier this year. Companies such as Walmart and Elf Beauty have used the funds to lower prices, while Home Depot and Target have boosted margins. Xerox has sold refund claims to reduce debt. Most CFOs view the refunds as a one-time benefit.

The public accounting sector is facing a significant transformation driven by artificial intelligence and private equity, writes Andrew Belnap of the University of Texas at Austin. The Grant Thornton-CBIZ deal exemplifies this trend, as AI increases the minimum efficient scale needed to compete, pushing firms to invest heavily in technology. Private equity provides the necessary capital, leading to consolidation similar to the early US tire industry.

Trade.xyz, a startup operating on the crypto exchange Hyperliquid, is pushing the boundaries of financial markets by offering 24/7 trading of perpetual futures tied to assets such as crude oil and pre-IPO companies. This model has already generated $500 billion in trading volume since its October launch, and is gaining attention from regulators and traditional finance institutions. Trade.xyz and Hyperliquid are lobbying for regulatory approval in the US, with President Donald Trump expressing support for bringing Hyperliquid into the country.

Fundraising for non-traded business development companies experienced a dramatic downturn in the second quarter of 2026, plummeting 82% to just $2 billion compared to $11 billion raised a year prior. This marked the lowest fundraising level since 2020 and significantly reduced the capital available for new loans across both private and publicly traded BDCs. The contraction in fundraising has tightened market liquidity and contributed to a shrinking portfolio for the largest public BDCs, as repayments have outpaced new loan originations for three consecutive quarters.

US business investment is on track to grow more than three times faster than Europe's since the pandemic, widening the transatlantic gap as American companies pour capital into AI infrastructure. Oxford Economics forecasts US corporate spending on equipment and facilities will rise 40% in real terms between 2021 and the end of 2027, compared with 12% in the euro area, with AI equipment a key driver. The FT reported that Google, Meta, Microsoft and Amazon are on track to invest more than $725 billion in 2026 alone, underscoring both the scale of the U.S. AI build-out and concerns that returns may fall short if the investment cycle reverses.