Hi, I’m Yan Arsenault and I lead the team that produces our quarterly newsletter, Market Point.
I want to take a few minutes to share what mattered most in markets during 2025, and what we’re paying close attention to as we head into 2026.
Let’s start with the big picture. 2025 was a strong year for both stocks and bonds. Inflation continued to ease, financial conditions improved, and markets responded positively.
From an economic standpoint, global growth remained resilient in 2025. Early in the year, several economies felt the strain of trade and tariff pressures but as the year progressed, inflation eased more quickly than anticipated, and overall financial conditions improved, providing firmer support for the expansion.
In the U.S., growth remained steady as well. Consumer spending continued to play an important role, but the experience was not the same across households. Higher-income consumers benefited from rising home and equity values, while many households continued to feel pressure from everyday costs.
Turning to equities, artificial intelligence remained an important driver of market performance last year. At the same time, market strength in 2025 was not limited to US large cap technology companies. International stocks and U.S. small-cap companies also delivered very solid returns.
Throughout 2025, we increased exposure to international markets and more economically sensitive areas. Improving growth prospects abroad and a weaker U.S. dollar supported that decision. Looking ahead, if global growth continues to strengthen, leadership could expand further, reinforcing the value of diversification rather than relying on a narrow set of market winners.
In fixed income, bonds also played a more important role in portfolios in 2025. Higher starting yields provided valuable income, and falling interest rates supported returns. Earlier in the year, we increased exposure to high-quality bonds and selectively added higher-yielding credit, while remaining focused on managing risk.
Looking ahead to 2026, several factors are helping support the economic outlook. Tensions between the U.S. and China have moderated. Fiscal spending remains supportive, driven in part by the One Big Beautiful Bill Act. And interest rate cuts from the past couple of years are still working their way through the economy. Together, these forces help create a more stable backdrop as we move into the new year.
One area we are watching closely is longer-term interest rates. Factors such as large government deficits and increased Treasury issuance could keep longer-term yields elevated, even if short-term rates move a little lower. This is why we continue to take a disciplined approach to interest rate risk.
Overall, our focus remains the same. Managing risk. Staying diversified. And positioning portfolios thoughtfully, so you can stay focused on your long-term goals.
