What happened in October?

Equity markets delivered mixed results in October, with increased volatility during the latter part of the month. Several factors contributed to changing investor sentiment, including geopolitical developments, higher energy prices, persistent inflation, international trade tensions, and uncertainty surrounding the upcoming U.S. midterm elections.

The ongoing conflict involving the United States and Iran continued to influence global energy markets. Restrictions affecting shipping through the Strait of Hormuz and the Bab al Mandab Strait contributed to higher oil prices, which have risen more than 80 per cent since the beginning of 2026. Elevated prices for crude oil, gasoline, and diesel have broader economic implications, as energy is an important input for transportation, manufacturing, and many other goods and services.

Inflation remained a central concern for policymakers. Higher energy costs and international trade restrictions contributed to inflationary pressures, while investors continued to assess the possibility of additional interest rate increases. In October, the Bank of Canada raised its policy interest rate by 0.25 percentage points, while the U.S. Federal Reserve maintained its existing rate.

What happened in September?

September was a more challenging month for investors concentrated in North American equities, although results remained stronger when viewed over the broader three-month period.

Many of the factors influencing markets over the past several months remained in focus. Inflation continued to run above central bank targets, contributing to interest rate increases from both the U.S. Federal Reserve and the European Central Bank during September. The Bank of Canada maintained its policy interest rate at 2.25 per cent.

Bond markets also experienced a difficult month as yields moved higher and bond prices declined. Concerns surrounding persistent inflation, higher energy prices, government borrowing and the outlook for interest rates contributed to the increase in yields. Longer term U.S. Treasury yields reached levels not seen in more than two decades, increasing borrowing costs and adding another source of pressure for financial markets.

Energy prices remained an important contributor to inflation. Ongoing geopolitical tensions in the Middle East continued to influence crude oil, gasoline and diesel prices, while investors monitored the potential implications for inflation, interest rates, and economic growth.

What happened in August?

August was the first month in more than two years in which all of the major indexes included in our market summary posted positive returns. Despite continued geopolitical and economic uncertainty, North American equity indexes and the All Country World Index moved higher. The TSX and S&P 500 gained nearly 3 per cent, the Dow advanced approximately 1.5 per cent and the NASDAQ rose almost 4 per cent.

Economic conditions continued to differ between Canada and the United States. Canadian inflation remained above the Bank of Canada’s target, while employment and economic growth showed continued resilience. In the United States, inflation also remained above target while employment growth showed signs of slowing.

Against this backdrop, both the Bank of Canada and the U.S. Federal Reserve continued to balance inflation and employment considerations when setting monetary policy. Expectations that U.S. interest rates could remain elevated, or potentially move higher, did not prevent equity markets from advancing during August.

Trade relations between Canada and the United States also remained an important area of focus. Negotiations ended without an agreement in August, adding another source of uncertainty for the Canadian economic outlook.

What happened in July? Geopolitical developments in the Middle East remained an important influence on global markets during July. Renewed military activity involving the United States and Iran contributed to continued uncertainty, while developments surrounding shipping routes and energy infrastructure kept oil markets particularly sensitive to changing events. Oil prices experienced renewed volatility throughout the month, rising following heightened tensions in early July before easing later in the month as markets responded to changing geopolitical developments. Despite the late-month decline, oil prices finished July more than 20 per cent above their levels at the end of February, reflecting the ongoing impact of geopolitical risk on global energy markets. While geopolitical developments remained the primary focus for investors, economic data and central bank decisions continued to shape expectations for inflation and interest rates. The Bank of Canada and the U.S. Federal Reserve both maintained their policy interest rates during July, while inflation data suggested that price pressures remain above central bank targets despite some moderation from recent highs.