Quarterly market outlook - 3rd Quarter, 2025
The Quarterly Market Outlook provides investors with our perspective on recent activity in the capital markets. The Edward Jones Investment Policy Committee offers its viewpoints on the U.S. economy, equities, the bond market, international markets and asset classes, as well as a special topic of interest to investors each quarter.
These aren’t short-term predictions. Rather, this is Edward Jones’ perspective on market and economic topics designed to help you make decisions affecting your long-term financial strategy. As you read through each topic, you'll find specific actions you can discuss with your financial advisor.
Looking back at the first half
Equity and fixed-income markets ended the first half of the year mostly higher, despite periods of policy-induced volatility.
Canadian outlook
The Canadian economy is slowing in the face of trade disruptions, adding to the case for further interest rate cuts. However, the risk that tariffs push inflation higher in the short term are keeping the Bank of Canada on hold for now.
Equity outlook
Equity markets have mounted a strong V-shaped recovery since their April 8 low, supported by easing tariff tensions and diminishing recession fears. With economic growth likely slowing and the TSX and S&P 500 at record highs, stocks may take a breather in the near term. However, we remain cautiously optimistic, expecting further gains for well-diversified portfolios in the second half of the year.
Fixed-income outlook
Bond yields for the major fixed-income asset classes remain above their averages over the past decade, providing the foundation for continued solid returns ahead. Yields appear poised to remain range-bound, which means most of the contribution would likely come from income rather than price appreciation. The Federal Reserve has been on the sidelines but should be able to resume its interest rate-cutting cycle soon.
International outlook
After lagging Canada and U.S. stocks in recent years, overseas equities rallied in the first half, outperforming both.1 Fiscal policy support, accelerating growth and discounted valuations suggest the outlook for overseas equities is improving. But given the outsized relative gains, we believe U.S. stocks could make back some lost ground in the second half of the year.
1 Developed overseas stocks represented by MSCI EAFE Net Return CAD Index.
Rising U.S. debt and deficit levels: What do they mean for investors?
The U.S. debt level is at its highest in history, surpassing $36 trillion, and is about 121% of the GDP of the economy. In Canada, however, the net government debt is substantially lower, closer to $1.5 trillion, or about 22% of GDP.
Strategic asset allocation guidance
Our Strategic Asset Allocation represents our view of balanced diversification for the fixed income and equity portions of a well-diversified portfolio based on our outlook for the economy and markets over the next 30 years.
Quarterly market outlook - Full report from Edward Jones
Download the entire quarterly market outlook report here.
Important information:
This content is provided as general information only and should not be interpreted as specific investment advice. Investors should make investment decisions based on their unique investment objectives and financial situation.
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