Global Index Performance

Indices	Month-to-date at May 31 2026	Year-to-date at May 31 2026
Canadian Bonds1	1.36%	1.72%
Canadian Large Cap Equities2	2.52%	10.61%
U.S. Large Cap Equities3	6.54%	11.82%
Developed Market Equities4	4.43%	10.28%
Emerging Market Equities5	11.03%	26.36%

Source: FactSet as of June 9, 2026.

Fixed Income*

Canadian fixed income markets were modestly positive in May as yields moved slightly lower, with the 10-year Government of Canada bond yield easing over the month and the yield curve flattening slightly. The Bank of Canada remained in a difficult position, balancing weaker growth data against sticky inflation, partly tied to energy-driven price pressures. The Bank continued to signal a cautious approach to monetary policy, while emphasizing that policy could still move in either direction depending on incoming economic data. In the United States, shorter-dated Treasury yields moved higher while longer term yields remained relatively elevated, amid renewed inflation concerns. The Fed left its target range unchanged at 3.50% to 3.75% at its late-April meeting, continuing to balance still-elevated inflation against signs of softer economic momentum.

Equities* 

Equity markets moved higher in May despite ongoing geopolitical and macroeconomic uncertainty. In Canada, the S&P/TSX Composite Index rose 2.5% for the month, supported by strength in communication services, while health care was the weakest sector. Canadian equities also continued to benefit from the market’s commodity exposure, particularly as energy remained a central macroeconomic variable. U.S. equities posted strong gains as well, helped by resilient corporate earnings, continued enthusiasm around artificial intelligence, and expectations for significant technology-related capital spending. The rally remained relatively narrow, however, with mega-cap growth stocks continuing to drive a meaningful share of the market’s advance. Outside North America, international developed markets also advanced, while emerging markets were notably strong. The conflict in the Middle East remained an important source of market risk. While hopes for a U.S.-Iran de-escalation helped sentiment at points during the month, the situation remained unresolved, and oil volatility continued to influence inflation expectations, central bank policy expectations, and sector performance.

 

Market Outlook

Markets have been supported by strong equity momentum, particularly in technology-linked sectors, while Canadian fixed income has benefited from slightly lower yields. Growing attention to elevated valuations reflects ongoing debate, even as earnings growth remains robust and shows some signs of broadening beyond the largest technology names. However, the broader economic picture is more cautious. Canada’s economy stalled in the first quarter, following a contraction in the prior quarter, leaving the economy near recessionary territory. At the same time, May labour market data were stronger than expected, with employment rising by 88,000 and the unemployment rate falling to 6.6%, suggesting that the economy is not uniformly weak. Trade uncertainty also remains an important risk, particularly as the CUSMA review approaches and questions around the future of North American trade policy remain unresolved. In commodity markets, oil remains a key source of uncertainty, as Middle East supply disruptions and changes within OPEC+ continue to influence inflation expectations and consumer spending. Elevated energy prices, policy uncertainty, slower global growth, and narrow equity leadership remain key risks, while fixed income continues to provide diversification and income potential alongside selective equity opportunities.

*Data sourced from FactSet as of June 9, 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