Good morning. In focus this week: the terms that could bring the U.S. and Iran closer to a deal; whether Canada’s largest banks can clear lofty expectations; what a battery of economic tests will tell us about the country’s momentum; and why AI is producing strong earnings alongside existential angst.

Energy: The federal government’s pipeline deal with Alberta includes a cancellation fee that critics say is too low to ensure the province holds up its end of the bargain.

Real estate: Developers are calling on Canada’s biggest banks to make it easier for them to get financing to start construction on condo buildings.

Labour: Restaurant chain Tim Hortons is planning to dial back its use of Ottawa’s Temporary Foreign Worker program to staff restaurants.

1. Deal or no deal?

The United States is close to reaching a deal with Iran that would end the war, reopen the Strait of Hormuz and see Iran give up its stockpile of highly enriched uranium, regional officials told The Associated Press yesterday. They said details and timelines would be worked out later.

U.S. President Donald Trump said on Saturday that a deal had been “largely negotiated,” but then said yesterday that the talks would continue beyond the weekend. Tehran and Washington have previously seemed close to a deal in recent weeks only to see diplomacy falter.

“Both sides must take their time and get it right,” Trump wrote on Truth Social. “There can be no mistakes!”

The strait’s reopening would begin to ease a worldwide energy crisis sparked by the surprise U.S. and Israeli bombardment of Iran on Feb. 28, which led Tehran to effectively close the waterway. Prices have spiked for oil, gas and several related products, jolting the world economy. Experts say it would take several weeks or even months for shipping and prices to recover once the strait is reopened.

2. Banking on a ‘banger’

Canada’s biggest banks are set to post a round of resilient profits, bucking economic uncertainty and looming trade pressure ahead of talks to renew the USMCA, The Globe’s Stefanie Marotta reports.

Analysts expect capital markets and wealth management activity to continue to bolster profits while loan growth slows and credit losses remain at elevated but manageable levels. Canadian bank stocks have surged 16 per cent this year on the optimism surrounding the sector’s ability to withstand economic uncertainty. That compares with an 8-per-cent climb from the S&P/TSX Composite Index.

While banks are expected to post strong earnings results this week, investor reaction will depend on management’s expectations for the latter half of the year, Jefferies analyst John Aiken said in a note to clients.

“Despite some serious potential headwinds, the Canadian banks continue to boast almost historically high valuations,” Aiken said. “We do not anticipate that the Q2 earnings will put this at risk, but with almost all the upside priced in, any questions surrounding promised robustness of the second half of 2026 could potentially upset the apple cart.”

CIBC Capital Markets analyst Paul Holden and his team perhaps said it best in a recent note to clients: “Six banks, two days – it’s going to be a banger.” Here’s the lineup:

Wednesday 

• Bank of Montreal
• Bank of Nova Scotia
• National Bank of Canada

Thursday

• CIBC
• Royal Bank of Canada
• TD Bank

3. Tracking Canada Inc.

Statistics Canada on Friday will release gross domestic product numbers for the first quarter, March and an early estimate for April – a kind of economic reckoning for the start of 2026, and an early look at whether tariff friction and volatile energy prices carried into the spring.

The Canadian economy is expected to grow at about a 1.5-per-cent pace in the first quarter, reversing a decline at the end of last year. That period looked less worrying beneath the surface, RBC economists Nathan Janzen and Claire Fan wrote on Friday, because consumers, businesses and governments were still spending.

Much of the drop came from businesses reducing inventories – a factor that can weigh on growth in one quarter but does not necessarily point to a lasting downturn unless companies keep cutting back.

The expected first-quarter gain should be driven by stronger household, government spending, and a rebound from strike-related disruptions that weighed on output late last year, the economists wrote.