Daily market snapshot

Monday, 12/15/2025 p.m.

• Stocks stumble – Following a bright start, we saw major equity indexes sell off over the course of Monday, adding to the declines seen at the end of last week*. In the U.S. large-cap space, weakness was concentrated in some large technology names, with further declines in Oracle and Broadcom adding to those seen after last week's third-quarter earnings reports*. These dynamics weighed on the technology-sensitive Nasdaq index, which fell 0.6% over the day and is now down 2.2% over December so far*. Small-cap stocks, which have generally outperformed in recent weeks, also struggled, with the Russell 2000 index down 0.7%*. Still, this benchmark remains up 1.3% month to date, benefiting from a rotation away from large-cap technology stocks*. In Canada, the S&P/TSX  closed 0.1% lower, with this index now broadly flat over December, but still up more than 27% year-to-date*. Government bonds rallied in the wake of softer-than-expected inflation data, with the yield on 2-year and 10-year government bonds down 3 basis points (0.03%), although 10-year yields at 3.4% remain close to the upper end of the 3%-3.5% range seen through much of 2025*. Gold was a touch higher, with prices approaching the record highs seen in October, while oil continues to drift lower, with WTI trading at $57 per barrel, a 2025 low*.
   
• Inflation cooled in Canada – Headline inflation held steady last month, at 2.2% y/y (year-over-year), but closely followed measures of underlying price pressures cooled*. The Bank of Canada's median and trimmed mean gauges of core inflation both decelerated to 2.8% y/y from 3% y/y in October, with the three-month annualized growth rates of these moderating even more to 2.3%*. These data suggest some signs that inflation is moving more sustainably toward the middle of the 2%-3% range targeted by the Canadian central bank, in our view. Slowing inflation could temper some of the building market expectations for an interest-rate hike in Canada toward the end of next year*. With growth expected to remain sluggish and trade-policy uncertainty high against the backdrop of a CUSMA renegotiation in our view, we would expect the central bank to leave interest rates on hold at a moderately supportive 2.25% through the course of 2026.
   
• Dollar drifting lower toward the end of the year – The U.S. dollar has had a difficult year. Following a prolonged bull run which pushed the currency to multi-decade highs, we have seen a correction in the greenback*. This has pushed the dollar down 9.4% against a trade-weighted basket of international currencies, and the dollar has been drifting lower through December*. We think that part of the U.S. dollar success story in recent years has related to a perceived U.S. exceptionalism, with higher growth, interest rates and equity returns compared to other parts of the world all helping create demand for dollar-denominated assets. Aspects of this story appear to have moderated in 2025, with U.S. growth slowing, the Fed cutting interest rates, and some international markets delivering robust returns. In part, we think the performance of the dollar in 2026 will likely depend on how many more interest-rate cuts we might see from the Fed. We think there is scope for one or two more moves, broadly in line with market pricing*, but a more aggressive easing could add to dollar downside, in our view.
   

James McCann;
Investment Strategy

^{Sources: *Bloomberg}

Friday, 12/12/2025 p.m.

• Stocks drop amid tech weakness - Major indexes retreated from record highs as the pullback in mega-cap tech stocks weighed on the Nasdaq, which finished 1.7% lower*. Broadcom reported earnings that beat expectations, but shares fell 11% on profitability concerns and questions around AI-related growth after a 70% rally earlier this year*. A key theme as markets close out the year is a rotation out of tech and into sectors that could benefit from steady economic growth and anticipated Fed easing*. Bonds also declined as the 10-year GoC yield rose to 3.44%*.
   
• Fed's balanced message lands well with investors - The Fed’s two-day meeting earlier this week was the last major market catalyst before year-end, and the outcome largely met expectations. The Fed cut its benchmark rate by a quarter point to 3.5%–3.75%, marking its third straight reduction*. While officials differ on the longer-term path, they maintained projections for one cut in 2026 and another in 2027*. Solid growth and inflation still above target suggest a possible pause in January, in our view, but the easing cycle likely isn’t over. Based on comments from his press conference, Chair Powell’s optimism on productivity and tariff-driven goods inflation appeared to reinforce that view. The Fed also announced it will buy $40 billion in short-term Treasuries over the next 30 days to replace maturing bills and keep its balance sheet steady. Next week, attention likely shifts to delayed U.S. CPI and jobs reports for October and November, though in his comments Powell warned of quality issues due to data collection distortions. In Canada, the November CPI is scheduled to be released on Monday, with consensus looking for a slight uptick from 2.2% to 2.3%*. The BoC's core measures remain higher, which suggests that the bank's rate-cutting cycle has likely concluded.
   
• Sector rotation underscores case for diversification in '26 - The Magnificent 7 group of mega-cap companies slipped this week after shares of both Oracle and Broadcom declined post-earnings*. Broadcom's results that were released last night exceeded expectations, but the company's CEO held off on giving an annual revenue forecast, which fed to the recent skepticism around lofty AI targets*. While tech takes a breather, investors appear to be rotating into areas with lower valuations and support from Fed easing, like small-caps and cyclicals. Both the equal-weight S&P 500 and Russell 2000 hit new highs before today's pullback, even as the tech-heavy Nasdaq remained below its late-October peak*. Looking ahead, AI should remain a major driver in 2026, in our view, but markets look to be broadening—within tech and beyond—with solid earnings across sectors and regions*. This can create opportunities for diversification, which we believe is key to building portfolio resilience.

Angelo Kourkafas, CFA;
Investment Strategy

^{Sources: *FactSet}

Thursday, 12/11/2025 p.m.

• Markets finish higher following Fed rate cut – The TSX and U.S. equity markets closed higher on Thursday, led by gains in materials and financial stocks that reversed an early pullback. Communication and technology stocks lagged as cloud-computing leader Oracle fell sharply after reporting disappointing second-quarter revenue and continued heavy capital expenditures*. Overseas, Asia dipped overnight, while European stocks traded broadly higher as Switzerland's central bank held its policy rate steady at 0%, in line with estimates*. The U.S. dollar weakened against major currencies. In commodities, WTI oil declined as markets weighed the implications of the U.S. seizure of a sanctioned oil tanker off the coast of Venezuela*.
   
• Jobless claims mixed – U.S. initial jobless claims rose to 236,000 this past week, above estimates of 213,000 and marking the highest reading in three months*. Continuing claims, which track the total number of people receiving benefits, fell to 1.84 million from 1.94 million, coming in below forecasts to hold roughly steady*. We believe this data confirms that the labour market continues to cool but is not collapsing. The unemployment rate remains modest at 4.4%, while job openings expanded in October to 7.7 million, slightly above unemployment of 7.6 million*. In our view, wage gains should continue to outpace inflation, providing positive real wages to sustain consumer spending and the broader economy.
   
• Bond yields mixed – Bond yields were mixed, with the 10-year Government of Canada yield down to 3.39% and the 10-year U.S. Treasury yield edging higher to 4.14%. Following yesterday's Fed rate cut, bond markets are pricing in expectations for two additional cuts to the fed funds rate next year** — exceeding the Fed's own forecast for one cut***. Lower interest rates should reduce borrowing costs for consumers and businesses, which we believe will support the economy and corporate profitability.
   

Brian Therien, CFA;
Investment Strategy

^{Sources: *FactSet **CME FedWatch ***U.S. Federal Reserve}

Wednesday, 12/10/2025 p.m.

• Markets rally to new record highs after Fed meeting – Equity markets delivered strong gains this afternoon after the Fed cut interest rates, as widely expected, and provided less hawkish signals than the market had seemingly feared around the path for future policy*. The S&P 500 index was up 0.8%, but the biggest gains were seen in small-cap equity markets, with the interest-rate-sensitive Russell 2000 index up close to 2% over the day*. Canadian equities also delivered strong gains, with the S&P/TSX index up 0.8%, even though the Bank of Canada opted to leave interest rates unchanged – as widely expected – arguing that current settings are appropriate*. We also saw a rally in government bond markets after the meeting, bringing the yield on the 10-year U.S. and Canadian bonds between 3-4 basis points (0.03% to 0.04%) lower*. Against this backdrop the U.S. dollar struggled, falling close to 0.5% against a trade-weighted basket of international currencies*. Conversely, lower interest rates helped push gold prices nearly 1% higher over the day*.  
   
• Bank of Canada happy to sit on its hands – At first glance there looks to be relatively few surprises from the Bank of Canada meeting this morning*. Rates were, as widely expected, held unchanged at 2.25%, and in terms of forward guidance, the bank is signaling that current monetary-policy settings look appropriate should the economy evolve as the central bank expects*. There was some acknowledgement that recent data have been a shade better than expected, with Governor Macklem flagging the resilience of activity seen in recent labour-market reports and in third-quarter GDP data*. Moreover, the Bank will be upgrading its growth expectations for coming years based on the recently passed budget that contains a range of measures aimed at boosting Canadian investment rates*. However, amid ongoing trade-policy risks, and with slack still evident in the Canadian economy, the overall message is that the moderately supportive policy setting currently in place remains appropriate given the outlook*. We think the Bank of Canada will hold interest rates steady in 2026.
   
• A divided Fed – As anticipated, the Fed's decision to cut rates today was contested, with two FOMC members (Schmid and Goolsbee) voting in favor of unchanged interest rates, while Miran continued to make the case for even deeper rate cuts*. This is the first time we have seen three dissents against an FOMC decision since 2019, underlining the divisions on the Fed's rate-setting committee around the path for policy*. Subtle changes to the language of the Fed's press statement that accompanied the decision today hinted that the central bank is preparing to take a pause from easing at its January meeting, following three consecutive interest-rate cuts*. Chair Jerome Powell seemed to amplify the signal that the central bank would be on hold, in the short term at least, at his press conference, but hinted that the Fed was likely to ease further by arguing it was unlikely the central bank's next step would be an interest-rate hike*. We think the Fed will cut just once or twice more next year, leaving interest rates in the 3%-3.5% range.
   

James McCann;
Investment Strategy

^{Source: *Bloomberg}

Tuesday, 12/9/2025 p.m.

• Stocks little changed ahead of BoC and Fed meetings – North American equity markets closed near the flatline on Tuesday as investors await the conclusion of the final Bank of Canada and FOMC meetings of the year tomorrow. Market expectations call for the Fed to deliver a 0.25% interest-rate cut at tomorrow’s meeting*, with much of investors’ attention likely focused on updated Fed economic projections and commentary regarding the appropriate path of monetary policy over the coming year. The Bank of Canada is expected to hold its policy rate steady at tomorrow's meeting.* On the economic front, the U.S. NFIB Small Business Index edged higher in November to 99, slightly above expectations for a reading of 98.3.* Additionally, U.S. job openings for October were higher than expected, holding steady near 7.7 million and signaling steady labour demand, in our view.* Bond yields closed slightly higher, with the 10-year U.S. Treasury yield finishing around 4.18% while the 10-year GoC yield rose to 3.42%.*
   
• U.S. small-business optimism improves in November – The U.S. NFIB Small Business Index rose to 99 in November, a modest improvement from the prior month and slightly above the 30-year average of 98.* Encouragingly, the percentage of small businesses planning to increase employment climbed to 19% for the month—a four-point increase from October and the highest level since December 2024.* This strong employment reading points to underlying stability in the U.S. labour market, in our view, and contrasts with the ADP employment report for November, which showed small businesses shedding over 100,000 jobs.* Additionally, the percentage of small businesses expecting inflation-adjusted sales to rise over the next three months increased to 15%, the highest since January.* We expect U.S. labour-market conditions to remain stable despite slowing job growth, which should help support healthy economic activity over the coming year, with U.S. real GDP growth settling around 2% in 2026, in our view.*
   
• Loonie weakness has provided support to overseas returns in 2025 – A softer loonie relative to developed overseas currencies, such as the euro and British pound, has helped provide a boost to overseas stock returns for Canadian investors in 2025. In local currency terms, the MSCI EAFE Index has posted a healthy 19% gain, but in Canadian dollar terms, the index has gained 24%.* In our view, 2026 could be another year of loonie softness relative to overseas currencies. With the European Central Bank likely at the end of its easing cycle and economic activity appearing to improve in Europe, we see limited scope for yields to decline there. Additionally, the Bank of Japan is expected to continue raising its policy rate into 2026.* Taken together, overseas yields could rise relative to those in Canada, potentially putting downward pressure on the loonie and helping reinforce the case for maintaining a globally diversified portfolio.*

Brock Weimer, CFA;
Investment Strategy

^{Source: *FactSet}