Canadian Prime Minister Mark Carney headed to China last week, meeting with senior officials and Chinese President Xi Jinping. The objectives of the meetings were to improve trade relations with China and try to reduce international security concerns.

Carney did walk away with several preliminary agreements with China, including a framework for energy deals. Canada is looking to sell more oil and gas to China and allow for more Chinese investment in renewable energy and battery technology.

Canada and China also outlined a plan for closer trade ties. A signed document showed Canada welcomes more Chinese investment into Canada, including in energy and agriculture.

A meeting with President Xi took place on Friday. Following the meeting, Carney said he expects China to lower tariffs on Canadian canola, while Canada will allow thousands of Chinese-made electric vehicles into Canada with a tariff rate of 6%, compared to the existing 100% rate.

Carney said he was looking to transform Canada’s economy and reduce its reliance on trade with the U.S. These preliminary agreements could be a big win for Canada. China is a massive market that could help Canada’s economy, particularly in critical sectors such as energy and agriculture. Canada is walking a delicate balance trying to increase trade with China, protect national interests and not upset upcoming trade negotiations with the U.S.

The U.S. annual inflation rate held steady at 2.7% in December, which was its lowest rate since July. The annual core inflation rate also held steady at 2.6%.

Core consumer prices increased by 0.2% in December over the previous month, coming in below the 0.3% rate expected by economists. This suggested to market investors that inflation is largely contained and coming down.

Retail sales showed some signs of strengthening in November, rising by 0.6%, marking its largest increase since July 2025. Retail sales had fallen by 0.1% in October.

The inflation and retail sales report did little to change expectations that the U.S. Federal Reserve Board (Fed) will hold its policy interest rate steady at its January meeting.

The Fed did come into the spotlight this week. Fed officials were served with subpoenas by the U.S. Department of Justice. Fed Chair Jerome Powell said it was related to his congressional testimony on the renovations being done to the Fed’s headquarters. Powell believes this is related to the Fed not lowering interest rates sooner or faster, as was the desire of U.S. President Donald Trump.

The U.K. economy grew by 0.3% in November, rebounding from October’s contraction. This was the fastest pace of monthly growth since June 2025.

The economy got strong contributions from its services sector, along with a pickup in goods production.

Within the services sector, rising wholesale and retail trade contributed to growth, as did the information and communication industry.

Significant gains did come from its industrial sector. Manufacturing production surged by 2.1% in November, which was its largest gain since February 2025. Factoring into this big improvement was Jaguar Land Rover reopening its factories after a six-week shutdown due to a cybersecurity attack. Higher manufacturing output was also seen in the pharmaceutical and basic metals industries.

The result was welcome news for an economy that struggled for traction in 2025 amid global trade tensions. The Bank of England (BoE) lowered interest rates again in December looking to provide some support to the U.K. economy but the outlook for more rate cuts is uncertain, with the BoE stating it will continue to monitor the path of inflation.