November 2025 Insights & Strategies

Macro Highlights for October

• There is a lack of official U.S. government data due to the shutdown, but the Atlanta Fed GDPNow estimate suggests that 3Q25 economic growth remained solid, up 4.0% in annualized gain over 2Q25. This follows the 3.8% growth that we saw in 2Q25, and a sustained rebound from the -0.6% contraction in 1Q25. Consumer spending continues to be a major driver, up 2.3%.
• The Canadian economy is being held back by a cloud of uncertainty, as consumers and businesses await definitive signals from on-again/offagain trade negotiations. Preliminary estimates are for annualized growth of 0.4% in 3Q25, avoiding a technical recession, but highlighting the fragility of the economy with growth slightly below the BoC forecasts. September looks to be offering a modest boost in GDP growth after the August contraction reversed the July gain.
• Labour markets continue to be a concern. While the U.S. unemployment rate remains low (4.3%), there is a growing concern of layoffs while the country is otherwise in a low-hire/low-fire environment. In Canada, the unemployment rate has remained higher (7.1%) as businesses continue to act cautiously and employers navigate the continuing trade uncertainty and lower growth.

Financial Markets in October

• In October, the S&P/TSX Composite gained 0.8% in price and 1.0% in total return, bringing its year-to-date gains to 22.4% and 25.1%, respectively. The S&P 500 posted a solid 2.3% gain in both price and total return, lifting its year-to-date performance to 16.3% in price and 17.5% in total return in local currency.
• After an impressive 56.1% rally since the end of July, the S&P/TSX Composite gold sub-industry underwent its first notable pullback in the latter half of October, with a 16.2% drawdown following an over 8% drop in gold prices, a pullback not unexpected after such a strong run. Nonetheless, we remain long-term constructive on gold and the TSX Materials sector, supported by enduring structural tailwinds.
• Over 78% of S&P 500 companies have reported results this earnings season, and aggregate earnings remain on track for another quarter of double-digit growth (currently at 12.5%). Cyclical sectors, such as, Information Technology, Financials, and Materials, are leading in earnings growth. However, the bar for positive market reactions has clearly risen, as strong headline results alone have not been enough to impress investors.

Upcoming

• With October rate cuts behind us, financial markets will be looking for signals about the potential for cuts at the next BoC and FOMC announcements on December 10. A weakening labour market suggests one more cut in the U.S., while the BoC rate, already at the low end of the estimated neutral rate will be more influenced by upcoming trade negotiations and further weakening in the economy and labour market.
• The U.S. Supreme Court has held oral arguments on the legality of President Trump’s use of IEEPA to impose broad tariffs. We do not expect a decision until early in 2026, but a ruling that overturns these tariffs could throw fresh uncertainty on government revenues and policy.
• The ongoing U.S. government shutdown could inject even more uncertainty and volatility into markets as participants turn to alternative data sources, and unpaid federal workers, including impacts such as reduced flights, could introduce drags on the economy.