Daily market snapshot

• Stocks finish mixed – Canadian stocks closed higher on Tuesday, with the TSX on pace for an annual gain of over 30% including dividends, while the S&P 500 finished near the flatline.* From a leadership perspective, most sectors of the S&P 500 finished the day flat to slightly lower, with energy and communication services among the top performers.* Overseas, Asian markets were mixed overnight while European markets traded mostly higher.* Bond yields ticked higher with the 10-year U.S. Treasury yield climbing to 4.12% while the 10-year GoC yield rose to 3.42%.* In commodity markets, precious metals added to strong year-to-date gains with silver gaining 8% and gold rising by 0.4%.
• Bond yield advantage over cash widens – Cash has narrowly outperformed Canadian investment-grade bonds in 2025, marking the fourth time in the past five years that cash has outperformed.* Despite 1% of interest-rate cuts from the Bank of Canada, longer-term bond yields trended higher in 2025, as resilient labour-market activity put upward pressure on yields, limiting returns for Canadian investment-grade bonds.*  However, Canadian investment-grade bonds currently yield over 1.3% more than cash, the highest since 2022.* With yield a key driver of fixed-income returns, we believe the yield advantage of Canadian investment-grade bonds over cash should pave the way for bonds to outperform cash over the coming years. For investors holding excess cash, consider reallocating to other asset classes—such as equities or other fixed-income investments—based on your risk tolerance, investment objectives and time horizon.
• U.S. housing market showing signs of stabilization – The U.S. Federal Housing Finance Agency (FHFA) home price index rose 0.4% in October, signaling potential stabilization after declines in four of the prior six months.* Similarly, the S&P Case-Shiller 20-city index increased 0.3%, exceeding expectations of 0.1% and marking the largest monthly gain since January.* This follows yesterday’s positive U.S. pending home sales report, which reached the highest level since February 2023.* U.S. mortgage rates, while still elevated compared to recent history, have eased from over 7% at the start of 2025 to roughly 6.5%, potentially bringing additional demand to the housing market.* Residential investment has weighed on U.S. economic growth, contracting in five of the past six quarters.* With U.S. mortgage rates off peak levels, an improvement in housing market activity and investment could provide an additional tailwind for U.S. economic growth in the year ahead.*
   

Brock Weimer, CFA;
Investment Strategy

^{Sources: *FactSet}

• Stocks close lower – North American equity markets closed modestly lower on Monday, with the S&P 500 coming off a 1.4% gain last week while the TSX gained 0.8%.* From a leadership perspective, defensive sectors of the S&P 500 such as utilities and consumer staples outperformed alongside energy, which benefited from higher oil prices, while growth-oriented sectors like technology and consumer discretionary lagged.* Overseas, Asian markets were mostly lower overnight, while European markets ended slightly higher.* On the economic front, the U.S. pending home sales index rose to 79.2 in November—the highest since February 2023—suggesting that the gradual decline in mortgage rates during 2025 may be spurring demand in the U.S. housing market.* In commodities, gold fell more than 4% Monday but remains on pace for a yearly gain of over 60%.* Bond yields edged lower, with the 10-year U.S. Treasury closing near 4.11% while the 10-year GoC yield fell to 3.39%.*
   
• TSX on pace for strongest annual gain since 2009 – It has been a strong year for Canadian stocks, with the S&P/TSX Composite up nearly 33%, including dividends through Friday’s close, despite a 13% decline in April following U.S. tariff announcements.* A key driver of Canadian markets has been the materials sector, which surged more than 105% in 2025, supported by a sharp rise in precious metals prices.* While materials is the clear outlier, other TSX sectors have also posted solid gains, with financials, consumer discretionary, and technology each up more than 25%.* South of the border, the S&P 500 is on pace for its third consecutive year of double-digit gains, while overseas equities are set to rise more than 25% in Canadian dollar terms.* We expect 2026 to be another favourable year for global equity markets, supported by steady economic and corporate profit growth. Accordingly, we recommend investors take a globally diversified approach to overweighting equities relative to bonds, with a focus on U.S. stocks, overseas small- and mid-cap stocks, and emerging-market equities. To view our full suite of portfolio guidance, check out our Monthly Portfolio Brief. 
   
• Tech investment helping drive U.S. economic growth – Last week’s U.S. GDP reading indicated that the economy remained on solid footing in the third quarter, with real GDP growing at a 4.3% annualized rate, exceeding economists’ expectations for a 3% gain.* Personal consumption expanded at a robust 3.5% clip, while exports surged 8.8%.* Additionally, nonresidential investment grew at a healthy 2.8% rate and has posted an average quarterly growth rate of 6.5% in 2025.* Strength in technology-related categories such as information processing equipment and software has provided a notable boost to nonresidential investment and we expect strong technology spending to continue into 2026, helping support economic growth. 

Brock Weimer, CFA;
Investment Strategy

^{Sources: *FactSet}

• Stocks tread water – U.S. equity markets were little changed today amid thin trading volumes at the end of a holiday-shortened week*. The S&P 500 finished just below Wednesday's record high, with the Nasdaq index broadly unchanged and the Russell 2000 small-cap index a touch softer (-0.5%)*. This follows a good run in U.S. equity markets over recent trading sessions as investors eye a potential "Santa Claus" rally through the rest of the year*. Canadian markets were closed for the day, as are those in Australia, Hong Kong and Europe*. Shorter-dated U.S. government bonds rallied on Friday, with the yield on the 2-year Treasury note down 2 basis points (0.02%) over the day, but the longer-dated 10-year note flat at 4.13%*. Finally, gold and silver prices continue to rally, helped by signs of geopolitical strain and a weaker dollar, with gold on track for its best year since 1979*.
• Oil prices react to geopolitics – The U.S. launched military strikes in Nigeria against Islamic State targets yesterday, according to President Trump, who cited the persecution of the country's Christian population by the military group*. The news, along with recent tensions around Venezuelan oil supplies, had put WTI oil on track to deliver its largest weekly gain since late October*. However, building hopes around progress toward a Ukraine peace agreement, and a potential easing in Russian oil sanctions, saw prices fall on Friday to $57 per barrel*. At current levels, oil prices are providing some helpful relief for U.S. consumers who continue to struggle with inflation rates that have now run above the Fed's 2% target for almost five years*. Markets do not look particularly concerned around late-year geopolitical headlines, with the VIX index, a measure of expected volatility, trading near a 2025 low*.
• A rewarding year for diversified investors – 2025 has been a strong year for diversified investors, with global equity and bond markets posting positive returns. Canadian equities led the way, with the S&P/TSX Composite up over 32% including dividends through yesterday’s close—the best annual gain since 2009**. Overseas markets also delivered, with the MSCI AC World ex US Index up more than 25% in Canadian dollar terms, the strongest gain since 2006**. South of the border, the S&P 500 has recorded 39 new all-time highs and is on pace for a third straight year of gains above 15%**. In fixed income, credit-sensitive assets such as international high-yield bonds rose over 7%**. Canadian investment-grade bonds have posted positive returns as well, on track for gains above 2%**. Strong performance across regions and asset classes underscores the importance of maintaining a well-diversified portfolio aligned with your goals, in our view. We expect 2026 to be another favourable year for equities. To view our full suite of portfolio guidance check out our Monthly Portfolio Brief. 

James McCann
Investment Strategy

^{Sources: *Bloomberg **FactSet}

The markets were closed on 12/25/2025.

• Stocks finish mostly higher – U.S. markets traded higher on Wednesday, with the S&P 500 gaining 0.3%, while the TSX finished near the flatline.* December appears to have lived up to its reputation as a favourable month for equity markets, with the S&P 500 tracking for a 1.2% gain and closing in on a third consecutive year of returns over 15%, while the TSX is higher by nearly 2% and on pace for an annual gain of over 30% including dividends.* Overseas, markets in Asia were mostly higher overnight, while European markets were little changed.* On the economic front, U.S. initial jobless claims ticked lower last week, falling to 214,000, below expectations of 231,000.* Bond yields finished modestly lower, with the 10-year U.S. Treasury yield falling to 4.13% and the 10-year GoC yield closing at 3.4%.*
• A rewarding year for diversified investors – 2025 has been a strong year for diversified investors, with global equity and bond markets posting positive returns. Canadian equities led the way, with the S&P/TSX Composite up over 32% including dividends through yesterday’s close—the best annual gain since 2009.* Overseas markets also delivered, with the MSCI AC World ex US Index up more than 25% in Canadian dollar terms, the strongest gain since 2006.* South of the border, the S&P 500 has recorded 39 new all-time highs and is on pace for a third straight year of gains above 15%.* In fixed income, credit-sensitive assets such as international high-yield bonds rose over 7%.* Canadian investment-grade bonds have posted positive returns as well, on track for gains above 2%.* Strong performance across regions and asset classes underscores the importance of maintaining a well-diversified portfolio aligned with your goals, in our view.
• Low consumer confidence has historically preceded strong equity returns – Yesterday’s U.S. consumer confidence reading fell to 89.1—the lowest since the peak of trade-policy uncertainty in April and well below the 30-year average of just under 100.* While it may seem counterintuitive, historically, low confidence has often preceded strong equity returns. Over the past 30 years, there have been 32 months when consumer confidence ranged between 80 and 90**. On average, the S&P 500 returned 13% including dividends in the following 12 months.** While history offers no guarantees, based on our outlook for steady economic and profit growth, we expect 2026 to be another favourable year for equities, and we recommend a global approach to overweighting stocks versus bonds. To view our full suite of portfolio guidance, check out our Monthly Portfolio Brief. 

Brock Weimer, CFA
Investment Strategy

^{Sources: *FactSet  **FactSet, Edward Jones}