From the Desk

First quarter U.S. GDP was a negative, at a -0.3% contraction. This was certainly a disappointing print, as it occurred before the reciprocal tariff threats intensified in April. However, below the headlines, results were not as dim. Imports saw a massive surge as households and businesses ramped up purchases ahead of the tariff hit, and that disrupted the GDP result. Since imports are considered foreign production, they are netted against personal consumption and business investment to avoid double counting in arriving at GDP. So, if imports were high due to front-end loading, that should start to average out over the next few quarters. In addition, real household consumption, which tends to be a robust indicator of growth, was a solid 1.8%. 

Nevertheless, we believe a slowdown is brewing. The port of Los Angeles, one of the busiest in the country, is forecasting that early May shipments from China will be one third lower than a year ago – and are expected to continue to drop. Indeed, a slowdown in shipments, which leads to layoffs in ports and transportation, could be how the next recession starts. Tariffs that pinch margins could accelerate small business failures and lower activity. Right now, west coast port traffic seems to be a critical high frequency indicator of where the economy is heading.

Sources: Bloomberg, Financial Times, 2025.

Demand levels for U.S. electricity are increasing significantly, driven by factors such as data center development, reshoring of industrial manufacturing and electrification of transportation and heating. While this demand increase could present unprecedented challenges to the country’s electric grid, it also opens up financing opportunities through private market solutions. 

Industry analysts forecast U.S. power demand to increase between 4% and 17% from 2024 levels through 2030. The increase has also highlighted several persistent issues with electric utilities that call for solutions, such as aging infrastructure, lack of transmission capacity and delays in permitting. Recent extreme weather events have also reminded us of the grid’s vulnerability, and of the need for grid expansion and modernization. 

Grid modernization may represent one of the more actionable issues on the list. Spending on transmission modernization tripled over 20 years between 2003 and 2023, increasing to $27.7 billion per year. While utilities and grid operators have historically financed these capital programs through traditional sources of capital, the extensive scale and need for rapid capital deployment have created the opportunity for more private capital to participate. Since 2016, private investments in energy infrastructure have risen, totalling $37.6 billion between 2017 and 2024, representing 24% of total investments. 

We expect significant capital will still be required to expand and improve the U.S. grid going forward. This could allow for private capital investors to participate in various financing solutions, including long-term private placement debt, for transmission development and expansion. The benefits of investing in core energy infrastructure assets might include potential for stable cash flows underpinned by long-term agreements, long asset life (50-plus years), strong sponsorship in grid operators and favorable regulatory regimes. However, considerable expertise would be required to navigate these markets and manage the inherent risks, but we expect more financing opportunities on the horizon as the U.S. power market continues to evolve.

Source: U.S. Energy Information Administration, Reuters, Deloitte, Sprott, WoodMackenzie, Smart Electric Power Alliance, The World Bank, 2025. 

Prime Minister Mark Carney secured a near-majority mandate in the Canadian election Monday. A key part of his platform is to make Canada an “energy superpower,” with various commitments to expedite new infrastructure and expand exports of natural resources.

A little-noticed promise in Carney’s platform is to launch Canada’s first transition bond. The commitment is that by 2027, the federal government could issue at least C$10 billion per year to finance projects to help industrial and agricultural sectors decarbonize.

That would be a significant volume. The Government of Canada launched its first green bond in 2022. The C$5 billion issuance, which was the largest Canadian green bond issuance in history, was more than two times oversubscribed. Proceeds went to things like renewable energy, zero emissions vehicles and adaptation. Demand for green investments in Canada wasn’t just domestic – nearly half the investors were foreign.

The question of what qualifies as a ‘transition’ investment in Canada is harder to pin down. The green bond framework already allows for nuclear power, which was added in 2023. By focusing on industrial and agricultural sectors, the Carney commitment signals that a transition bond could potentially go toward projects like low-carbon steel, hydrogen, cement and concrete. 

The question remains: what criteria would projects need to meet to be credibly deemed “transition”? Efforts to create a sustainable finance taxonomy in Canada have stalled for several years, although Carney promises to finalize it by fall 2026.

Sources: Government of Canada, CTV News, 2025.