2025 Year-to-Date: Market & Economy Snapshot
2025 Year-to-Date: Market & Economy Snapshot
Here is a quick investment summary for the year:
| Market/Index | Return (Local Currency) | Return in CAD |
|---|---|---|
| Canada - S&P/TSX Composite | +12.9% | +12.9% |
| US - S&P 500 (SPY/VFV.TO) | +10.7% | +5.8% |
| International Developed - MSCI EAFE (EFA/XEF.TO) | +23.3% | +18.3% |
| Canada Aggregate Bonds | +0.8% | +0.8% |
Source: Bloomberg.com
CAD returns reflect currency movements — the Canadian dollar’s strength in 2025 has trimmed U.S. and international performance for Canadian investors.
Monthly Returns - 2025
If we look at monthly we can see that things have mostly been positive, other than a few months.
| Month | S&P/TSX (CAD) | S&P 500 (USD | MSCI EAFE (USD) | S&P 500 (CAD) |
|---|---|---|---|---|
| Jan | +0.56% | +2.11% | +4.80% | +3.86% |
| Feb | +2.31% | +0.25% | +2.95% | -1.78% |
| Mar | -1.36% | -5.89% | +0.18% | -6.26% |
| Apr | +1.77% | -0.52% | +3.70% | –4.82% |
| May | +4.22% | +5.18% | +4.79% | +5.74% |
| Jun | +3.11% | +5.43% | +2.40% | +4.37% |
| Jul | +2.84% | +2.55% | +0.54% | +1.40% |
| Aug¹ | +1.22% | +2.97% | +2.77% | +1.85% |
¹Partial month to Aug 14
Source: bloomberg.com
Market Mood: Calm with Occasional Surprises:
Most of 2025 has seen low volatility, but there have been two notable exceptions:
- Early-summer tariff flare-up — U.S.–China and U.S.–EU trade tensions briefly rattled markets before talks cooled nerves.
- Liberation Day rally — Major geopolitical agreement boosted confidence and helped equities recover quickly from the tariff dip.
Outside these blips, market moves have been steady, with economic data releases (CPI, GDP, jobs) being the main short-term catalysts.
Going forward it is (as always) difficult to predict.
Economic Highlights:
Canada
- Bank of Canada Interest Rate: 2.75% (held July 30) — cautious stance with potential easing if growth slows.
- Inflation: 1.9% (June) — near target.
- Jobs: Unemployment at 6.9% in July, showing signs of labour market softening.
United States
- GDP: Q2 growth +3.0% annualized — stronger than expected.
- Inflation: CPI at 2.7% (July) — close to target, but producer prices hotter.
- Jobs: Unemployment at 4.2%.
International
- Euro Area: GDP +0.1% (Q2) — weak growth, inflation at 2.0%.
- Japan: Strong equity performance driven by corporate reforms and weaker yen.
Investor Takeaways
- Goldilocks feel — Growth steady, inflation easing, volatility low… apart from brief tariff and geopolitical jolts.
- Currency matters — CAD strength has reduced foreign returns in 2025.
- Diversification pays — International markets lead this year, even after currency effects.
- Stick to your long-term plan and avoid chasing short-term leaders.
What to Expect for the Rest of 2025
- Global and Canadian growth remains modest—not robust—but not collapsing.
- Markets face bifurcated risks:
- Bearish: Softening growth, inflation stickiness, elevated valuations could spark corrections (10–14%).
- Bullish: Structural reform, AI, and policy shifts may fuel gains into early 2026.
3. Volatility remains subdued, though hedging strategies may be prudent due to high valuations and policy-driven uncertainty.
4. Diversification remains vital—across geographies and themes—to navigate uncertainty.
Source: Bloomberg.com
