Market commentary
When we last wrote in early July, oil prices were falling and the conflict with Iran appeared to be easing. That proved short-lived. Tensions built through the summer, oil prices rose and the prospect of the Strait of Hormuz reopening soon became increasingly remote.
Meanwhile, the normally boring bond market captured headlines. The U.S. government continues to borrow at a rapid pace, and investors are demanding higher yields in return. The 30-year U.S. Treasury yield reached 5.24% on September 4, its highest level in nearly 20 years. Concerns are mounting about the cost of servicing all that debt at higher rates. Yet the current yield is only slightly above its 40-year average of roughly 5.1%, a reminder that rates could remain elevated—or move higher—from here.¹
The Trump administration’s proposed solution is to “grow its way out” of the debt. That is a bit like planning to pay off your mortgage by winning the lottery: possible, but probably not a great standalone strategy.
The other topic on everyone’s mind is the Canada-U.S. trade dispute. We expect it to be resolved relatively quickly because the consequences of a prolonged fight are simply too high for both sides. President Trump also wants another deal to announce after seeing the last one unravel at the final moment. Don’t be surprised if you wake up to news of “the best trade deal ever!” Yes, we have heard that before.
The process will not be pain-free, but we believe Canada can emerge stronger. Currency markets have offered some support for that view: the Canadian dollar strengthened against the U.S. dollar through August.¹
Portfolios continued their strong run. All three mandates—Growth, Balanced and Conservative Income—captured less of the downside when markets fell in July, then outpaced their benchmarks as markets recovered in August. That extends the streak to six months and coincides with the completion of the portfolio changes tied to our long-term strategy.
Wellington-Altus has allowed us to build a more sophisticated and diversified private-asset allocation. Implementation took several months, but the results have been encouraging. Despite persistent market noise and widespread uncertainty, we believe the portfolios are well positioned to manage the risks ahead and keep clients on track toward their long-term objectives.
Chart of the month: Canada Pension Plan
Global SWF’s May 2026 review of major pension and sovereign wealth funds ranked CPP Investments second among global public pension funds for 10-year annualized returns across fiscal years 2016 to 2025. CPP Investments delivered an average annual return of 8.34% over that period; only Sweden’s AP7 ranked higher.²
The health of the Canada Pension Plan matters to all of us. It is reassuring to know the plan remains financially sustainable for generations to come. Canada’s model should also be a point of pride: CPP Investments helped reshape how large public pension plans are governed and invested, and institutions around the world have studied its approach for decades.²
Constellation Wealth is among a relatively small group of private wealth managers that model portfolio construction on similar principles: broad diversification, long time horizons and meaningful exposure to private markets. Our Growth and Balanced mandates have both exceeded CPP Investments’ return over the past five years—a result we are proud of.
Content Recommendation:
I’m not typically a huge Joe Rogan fan, but I spent much of the summer recommending his interview with Marc Andreessen. Andreessen is the co-founder of Andreessen Horowitz, one of the world’s most influential venture-capital firms, so he knows a thing or two about technology. I found his perspective on artificial intelligence particularly interesting—and surprisingly reassuring.
Watch the Marc Andreessen interview on YouTube
Portfolio strategy
Debt
Liquid fixed income
- Government deficit spending and elevated inflation are pushing bond yields higher.
- Markets are anticipating rate hikes from the European Central bank and the U.S. Federal Reserve this month.
- Although returns have been weak this year, higher yields have improved return expectations.
Private credit
- Our modest exposure continues to deliver solid returns, providing excess return over liquid credit and portfolio diversification benefits.
Equity
Public equity (stocks)
- Stocks moved sideways through the summer as geo-politics and higher interest rates overshadowed robust earnings growth.
- Future price earnings ratio of the S&P500 stands at 19.5x, which has been falling steadily and now stands only slightly above it’s 10-year average of 19x.3
- Valuations are highly dependent on continued spending on Artificial Intelligence (AI)
Private equity
- Blackstone’s AI-related investments produced exceptional returns the past couple months.
- More high-profile initial public offerings should support private equity returns and improve exit activity across the industry
Real assets
Real estate
- Portfolios contain only minimal real estate exposure through a small allocation in Apollo Aligned Alternatives.
- Returns seem to be improving, but on balance, we see better opportunities in infrastructure.
Infrastructure
- KKR and Apollo agreed to invest C$2.7 billion in a new joint venture that will fund two expansions of Enbridge’s Westcoast natural gas pipeline system in British Columbia.⁴
- We will be watching the Canada Investment Summit closely and expect further announcements involving global investment in Canadian infrastructure projects.
1 Market and exchange-rate data: Federal Reserve Bank of St. Louis and Bank of Canada. The 40-year Treasury average is calculated from daily FRED observations from September 4, 1986 through September 4, 2026. Source
2 Pension-fund ranking: CPP Investments, based on Global SWF data. CPP sustainability: Office of the Chief Actuary of Canada. Source
3 Price-to-earnings data as of September 4, 2026: FactSet Earnings Insight. Source
4 Enbridge, KKR and Apollo joint-venture announcement, August 27, 2026. Source
5 Government of Canada, Canada Investment Summit 2026. Source