Global Index Performance
Fixed Income*
In August 2025, the Canadian fixed income market posted modest gains with the 10-year Government of Canada bond falling to around 3.4% for the full month. The Bank of Canada has kept its policy rate steady at 2.75% since March after easing a total of 225 basis points since June 2024. Investors expect two more 0.25% rate cuts by the end of 2026 to support growth amid trade and inflation uncertainties. Meanwhile, in the U.S., fixed income markets experienced modest volatility as Treasury yields fluctuated in response to mixed economic data. The Federal Reserve's policies continue to impact investor sentiment, but no decisive moves were made in August as the market assessed inflation trends and growth prospects. Corporate bond segments remained relatively stable, helped by solid earnings and steady demand from investors seeking income, though there was a slight broadening of credit spreads reflecting some increased caution.
Overall, the fixed income landscape in both countries reflects a balance between expectations for easing monetary policies and vigilance over economic and geopolitical risks.
Equities*
The Canadian equity market performed well in August, led by a strong rally in the resource sector—particularly industrial metals—boosted by higher commodity prices and solid domestic demand. The S&P/TSX Small Cap Index surged 9.3%, outpacing the broader TSX Composite’s 4.9% gain, with materials and tech stocks contributing to the positive momentum. Banks and pipelines also added to gains, while consumer staples saw slight declines amid easing tariff concerns.
Major U.S. equity indexes rose for a fourth straight month, fueled by growing expectations of Federal Reserve rate cuts after a weaker-than-expected July jobs report and downward revisions to previous employment data. The market was driven by strong tech earnings and resilient consumer spending, though growth stocks faced some pressure from rising bond yields.
International developed markets posted moderate gains largely due to easing geopolitical tensions and improved earnings outlooks. Emerging markets delivered a more modest return, supported by stabilizing currencies and improving export conditions despite ongoing global uncertainties.
Market Outlook
Historically, the fall season tends to bring more market volatility compared to the relative calm of summer. September, in particular, is known as the worst month for the equity market—with the S&P 500 averaging a decline of around 1.17% since 1928—and the second half of September being the weakest two-week period on average. This increased volatility tends to be driven by factors such as corporate earnings announcements, central bank policy meetings, and renewed geopolitical risks. The VIX also exhibits strong seasonal spikes in the fall, adding to risk sentiment.
Bond markets are not immune to seasonal pressures, as long-term government bonds have lost value in September over the last decade, partly due to large issuance to fund government spending. Given these trends, investors can expect a more dynamic market environment in the fall. Fiduciary Trust Canada portfolios are diversified across sectors and geographies, providing a robust framework to help mitigate market volatility.
*Data sourced from FactSet as of September 4, 2025.
1. As measured by the FTSE Canada Bond Universe Index
2. As measured by the S&P/TSX Composite Total Return Index
3. As measured by the S&P 500 Total Return Index in CAD
4. As measured by the MSCI EAFE Total Return Index in CAD
5. As measured by the MSCI EM Total Return Index in CAD