Global Index Performance

Indices	Month-to-date at December 31  /2025	Year-to-date at December 31/2025
Canadian Bonds1	-1.28%	2.64%
Canadian Large Cap Equities2	1.32%	31.68%
U.S. Large Cap Equities3	-1.61%	12.35%
Developed Market Equities4	1.29%	25.70%
Emerging Market Equities5	1.30%	28.05%

Source: FactSet as of January 14, 2026.

Fixed Income*

The Bank of Canada (BoC) continued its easing cycle in 2025, further reducing its policy rate throughout the year as inflation trended closer to target and economic concerns grew as US trade tensions escalated. In December, the Bank held the policy rate steady, signalling a pause in the easing cycle as policymakers judged the current level to be appropriate for near term conditions. In the United States, the Federal Reserve also lowered its policy rate by 25 basis points in December, reflecting softer economic data and cooling inflation, while emphasizing a cautious, data-dependent approach amid internal disagreement on the future path of policy. Looking ahead to 2026, markets expect both central banks to remain guided by incoming data, with the BoC’s pause leaving room for potential tightening should growth reaccelerate, and the Fed retaining flexibility to ease further if economic conditions soften.

Equities* 

Equity markets delivered strong returns in 2025, with Canada ranking among the top-performing major markets globally. The S&P/TSX Composite posted robust gains for the year, led by materials, energy, and financials, and outperformed many developed peers despite modest weakness in December trading. U.S. equities also generated solid returns, with the S&P 500 advancing meaningfully as seven of eleven sectors delivered double-digit gains, reflecting broader participation relative to recent years that were more heavily concentrated in technology and AI-driven returns. While U.S. markets were largely flat in December, stronger-than-expected GDP growth through the year, despite some labour market softening, pointed to productivity-driven expansion. International equities posted positive returns as well, with developed European markets showing resilience and emerging markets among the strongest performers globally in 2025, supported by favourable growth trends and currency dynamics.

Market Outlook

Throughout 2025, investors navigated a market shaped by central-bank pivots (easing), strong equity returns, and modest fixed-income performance. In the United States, expectations of prolonged restrictive policy early in the year gave way to easing in late summer and fall, supporting both credit and equity valuations and reinforcing the importance of yield and income in portfolio construction.

Equity Markets remained resilient amid macroeconomic uncertainty in 2025. While Canada and the U.S. delivered solid performance, international developed markets and emerging markets outperformed U.S. equities over the year, highlighting the diversification benefits of global exposure. Broad sector participation, including leadership from both cyclical and growth areas such as technology, supported risk assets despite intermittent volatility. Late-year economic data remained constructive, with the unemployment rate declining to 4.4% in December and year-over-year employment gains recorded across all provinces except Nova Scotia, even as structural labour constraints persisted.

Looking ahead to 2026, our outlook remains constructive but measured. We expect monetary policy to stay data dependent, with central-bank pauses and selective easing supporting opportunities across risk assets. In this environment, disciplined diversification across fixed income, domestic and U.S. equities, and international markets, paired with active risk management and a long-term focus aligned to client objectives, will remain key to navigating the year ahead.

*Data sourced from FactSet as of January 14, 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