Global Index Performance

Indices	Month-to-date on September 30 2026	Year-to-date return as of  September 30 2026
Canadian Bonds1	-1.22%	-0.78%
Canadian Large Cap Equities2	-2.62%	12.97%
U.S. Large Cap Equities3	2.06%	16.78%
Developed Market Equities4	-0.67%	14.77%
Emerging Market Equities5	1.90%	28.15%

Source: FactSet as of October 15, 2026.

Fixed Income & Economic Update*

Bond markets declined in September amid changing expectations for inflation and interest rates. Canadian bonds lost 1.22% for the month and were down 0.78% year to date as of September 30, with longer-term bonds hit hardest.

Central banks moved in opposite directions during September. The Bank of Canada held its policy rate at 2.25% on September 2, while Canadian employment declined in August and September. Bank of Canada Governor Tiff Macklem indicated that new U.S. tariffs could result in Canadian fourth-quarter economic growth of less than 1%. By contrast, the U.S. Federal Reserve increased its target range by 25 basis points to 3.75%–4.00% on September 16, its first increase since 2023.The pressure on bonds extended beyond central bank policy. Elevated government borrowing and debt issuance associated with AI infrastructure investment conrtributed to an increase in the supply of bonds available to investors. The U.S. 10-year Treasury yield rose from approximately 4.8% to near 5.3% during September, reaching its highest level since 2007.

Equities* 

Canadian equities as measured by the S&P/TSX Composite Total Return Index, returned −2.62% in September and 12.97% year to date as of September 30, 2026.. Approximately three-quarters of TSX constituents fell during the month, and information technology was the only sector to post a positive return. Lower commodity prices affected mining companies, while higher bong yields hit the banks. Trade uncertainty as also increased after Canadian counter-tariffs on C$27.6 billion of U.S. imports took effect on September 8, and the United States introduced additional  import restrictions.

U.S. large-cap equities, as measured by the S&P 500 Total Return Index, returned -0.35% in USD during September 2026 and 2.06% in CAD during September 2026. The difference primarily reflected  the Canadian dollar depreciation against  the U.S. dollar during the month, which increased the Canadian-dollar return of unhedged U.S. equities.

 The performance of large technology companies masked weaker market breadth: the equal-weight S&P 500 fell approximately 4.8%, while only the technology and communication services sectors advanced. Consensus estimated indicated that the S&P 500 earnings were expected to increase by approximately  29% in the third quarter. Investment in AI infrastructure continued to support technology-sector performace, although uncertainty remains as to whether future  returns will justify the spending, particularly where investment is financed through debt.

International developed equities slipped 0.67% in Canadian dollars as higher energy costs and rising yields weighed on sentiment. The European Central Bank raised interest rates for the second time in 2026 and indicated  inflationary pressures associated with the Middle East conflict were expected to keep inflation above its target for an extended period. Emerging markets returned 1.90% in Canadian dollars, compared with −0.65% in U.S. dollars, as the weaker Canadian dollar again boosted returns on foreign holdings. Gains in Taiwan and South Korea on semiconductor strength offset declines in China and India. Both developed and emerging markets remained positive year to date as of September 30 2026, although performance varied by region, sector and country.

Broad Market Overview & Outlook

September marked a more challenging end to a third quarter that remained positive overall, following record highs for both the S&P/TSX Composite Index and the S&P 500 in August. Rising bond yields, persistent inflation and increasingly concentrated equity-market gains highlighted the importance of looking beyond headline index returns. In our view, markets may be adjusting to an environment of firmer growth, persistent inflation and higher borrowing costs, influenced by government deficits, defence spending and in AI infracstructure. These conditions may contribute to periods of increased volatility, although the economic and market outlook remains uncertain. In Canada, headline inflation increased to 3.1% in September, while the Bank of Canada’s preferred measures of core inflation declined below 2%, providing the Bank with flexibility  ahead of its October 28 decision.

In our view, uncertainty surrounding the U.S. midterm elections on November 3, may contribute to elevated U.S. and global equity market volatility  in the near term. Historically, midterm election years have experienced periods of greater volatility within the four-year U.S. presidential election cycle. The S&P 500 has historically generated positive returns during many of the 12 month periods following U.S. midterm elections; however, past performance does not guarantee future results. In our view, a disciplined investment approach includes  maintaining diversified equity exposure, assessing the quality and durability of earnings, and evaluating fixed income investments with regard to both interest rate and credit risk. Because the S&P/TSX Composite Index has significant exposure to the financials, materials and energy sectors, a portfolio with substantial Canadian  home bias may be particularly sensitive to changes in interest rates and commodity prices. Diversifying across regions, sectors and sources of return may help reduce concentration Risk, although diversification does not guarantee a profit or protect against loss.

*Data sourced from FactSet as of October 15, 2026. 

 

 

 

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