To help you better understand the performance of funds presented in your quarterly statement, Bâtirente’s Investment Strategy Manager, Jean-François Dumais*, shares the economic and market highlights of 2025’s third quarter.
ECONOMY
Tariffs, Labour Market, Inflation, Central Banks, and Debt
Several agreements have been reached to reduce or eliminate the tariffs announced in the second quarter.
However, ongoing uncertainty regarding the implementation of these tariffs is putting pressure on the job market in both Canada and the US, leading to a rise in unemployment rates on both sides of the border.
As for inflation, the situation is mixed: In Canada, it has returned to target, which is good news, while in the US, inflationary pressures remain strong.
In this context, the US economy could enter a period of stagflation, which is characterized by stagnant economic growth coupled with persistent inflation. This scenario could result in further job losses.
Despite the risks tied to inflation, the US central bank has lowered its key interest rate to stimulate the job market. Additional rate cuts are expected over the coming year.
Finally, governments are increasing spending to support economic growth and counter tariff-related threats.
MARKETS
Equities
Trade agreement resolutions and global interest rate cuts drove strong equity market gains in the third quarter.
On one hand, the MSCI All Country World Index delivered a return of 9.7% (in Canadian dollars), driven by the remarkable performance of US artificial intelligence-related stocks — the so-called “Magnificent Seven” — which rose 17.6% (in Canadian dollars).
On the other hand, the S&P/TSX Index, the Canadian market’s leading benchmark, posted a return of 12.5%, mainly supported by the strength of gold-related securities (45.6%) and the financial sector (10.6%).
Bonds
Central bank interest rate cuts and expectations of further reductions have benefited bonds. As a result, the FTSE Canada Universe Bond Index delivered a return of 1.6%.
2025 OUTLOOK
Expected volatility
Regardless of certain tariff agreements, Donald Trump’s presidency could lead to increased volatility in the coming years. The US economy remains exposed to the risk of stagflation.
In such a context, it becomes challenging to predict which asset classes will perform best. That is why maintaining a well-diversified investment strategy — across both asset classes and geographic regions — remains essential to navigate uncertainty more confidently.
Finally, in a volatile environment, it is crucial to stay focused on your long-term financial goals and to make decisions aligned with your investor profile.
Jean-François Dumais has worked as an Investment Strategy Manager at Bâtirente since 2019. Along with a Master of Business Administration (MBA) degree (Finance specialization). He has over 20 years’ experience in financial markets.