Global Asset Allocation Team Market Update – September 2025

Global equity markets closed out strong month in August. The MSCI All Country World posted a robust +2.4% gain. Regionally speaking, all major benchmarks we track generated positive results. The S&P 500 hit several record highs and gained 1.9% for the month, while the S&P/TSX led the global charge and advanced 4.8% thanks to solid performance in the heavily weighted gold sector (+19.8%). Elsewhere, the MSCI EAFE posted a respectable 4.1% gain, while the MSCI gauge of emerging market stocks rose 1.2%.

Fixed income markets also generated positive results as traders ramped up their wagers for central bank rate cuts. Yield curves steepened in a bullish fashion, with the decline in the policy-sensitive two-year yield exceeding that of the longer-term ten-year yield. In the United States, dovish-leaning rhetoric from both Chair Powell and Governor Waller appeared to open the door to a rate cut at the September 16-17 gathering – with those wagers rising to 90%. The 2-year treasury yield fell by 34 basis points to 3.62% – while the 10-year yield declined 15 basis points to 4.23%. Similarly in Canada, a softer than expected reading on second quarter GDP and a weak jobs report saw traders increase the odds of a September rate cut to 70%. The 2-year Government of Canada bond yield declined 13 basis points to 2.64%, while the 10-year yield fell 8 basis points to 3.38%. For the month, the Bloomberg US Aggregate Bond Index rose 1.2%, while the FTSE Canada Bond Universe gained 0.4%.

The US dollar (-2.2%) weakened on the back of the prospect for rate cuts and attacks on the Federal Reserve. The greenback was weaker versus all its Group-of-10 peers.

Finally, oil (-7.6%) stumbled following reports that OPEC and its allies are preparing to release additional idled capacity – which is threatening to amplify the supply glut in the market. By contrast, gold (+5.9%) pushed towards a record high as the prospect of US interest rate cuts and growing concerns about the future of the Federal Reserve boosted bullion prices.

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