Global Asset Allocation Team Market Update – July 2025

Global equity markets had a solid month, with the MSCI All Country World rising 4.4% in June. The S&P 500 closed at a fresh record thanks to impressive performance in the “Magnificent 7” group of stocks – while the S&P/TSX also jumped higher. Elsewhere, international stocks extended their recent gains – while the MSCI gauge of emerging market stocks led the global charge.

Fixed income markets also generated positive results. Treasury yields pushed lower on increasing expectations for Federal Reserve rate cuts. While keeping rates unchanged in June in order to see how things evolve on the tariff front, some officials provided comments related to potential future rate cuts. Notably, Governor Bowman took a dovish turn and said she would support a July cut if inflation remains subdued, while Governor Waller said he doesn’t think they need to wait much longer to cut. Markets are pricing 65 basis points of rate cuts this year versus 34 basis points in early June. That saw the policy-sensitive 2-year treasury yield fall 18 basis points to 3.72% – while the 10-year yield declined 17 basis points to 4.23%. By contrast, Canadian government bond yields rose after the Bank of Canada left rates unchanged for a second straight meeting. For the month, the Bloomberg US Aggregate Bond Index rose 1.5% – while the FTSE Canada Bond Universe was unchanged.

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