Global Asset Allocation Team Market Update – August 2025

Global equity markets extended their gains and pushed broadly higher in July, with the MSCI All Country World rising 1.3%. The S&P 500 (+2.2%) hit a string of new records thanks to solid earnings results in the “Magnificent 7” group of stocks and as President Trump inked some trade deals. The S&P/TSX (+1.5%) also ended the month higher. By contrast, the MSCI EAFE (-1.5%) stumbled last month – while the MSCI gauge of emerging market stocks gained 1.7%.

Fixed income markets generated negative results last month. Treasury yields rose following a string of stronger-than-expected economic data and persistent inflationary pressures that prompted a hawkish-leaning response from the Federal Reserve. Of note, the Fed’s preferred measure of underlying inflation increased in June at one of the fastest paces this year – underscoring limited progress on taming inflation. The 10-year treasury yield rose 15 basis points to 4.37%, while the two-year yield increased 24 basis points to 3.96%. Similarly in Canada, government bond yields backed up meaningfully as sticky core inflation, a surprisingly strong jobs report, and the lingering cloud of tariff-related uncertainty saw the Bank of Canada to remain on the sidelines for a third straight meeting. Both the ten-year and two-year yields rose 18 basis points to 3.46% and 2.77%, respectively. For the month, the Bloomberg US Aggregate Bond Index declined -0.3% – while the FTSE Canada Bond Universe shed -0.7%.

The US dollar (+3.2%) closed out its best month since April 2022 and ended a run of six straight monthly declines in the first half of 2025 after Chair Powell hinted that interest rates may need to stay elevated for longer, while progress on trade negotiations also added to dollar strength. The greenback was stronger versus all its Group-of-10 peers.

Finally, oil (+6.4%) capped its best month since September 2023 amid threats of US sanctions on Russia that risk restraining supplies. Gold (-0.4%) edged modestly lower on the back of the stronger US dollar – while the latest rise in treasury yields also dampened the allure of the non-interest-bearing precious metal.

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