As the U.S. economy adjusts to global tariffs, disruption and uncertainty impact the entire globe. The U.S. attack on Iran on February 28th put 3.3 million barrels per day of Iranian oil at risk, amounting to 3.5% of global supply. A disruption to the Strait of Hormuz, which borders Iran and accounts for 20% of global oil and LNG transits, further heightens the global impact. Iran’s retaliation has rained missiles on Israel, its Arab neighbours and American bases in the region.  Iran’s leadership may see dragging its Gulf neighbours further into the crisis as one of its few means of forcing America back to the negotiating table. Market mayhem could just be the start of it if the war drags on and spreads farther into the Middle East. A protracted and messy conflict will push energy prices upward around the world, raising inflation and grinding growth to a halt, prolonging stagflation. In February we maintained our twelve-month forward outlook of three months of Stagnation (U.S. Real GDP growth less than 2.5%) followed by nine months of Recession (negative GDP growth) over the next twelve- month period.

China’s annual inflation eased to 0.2% in January 2026 from 0.8% a month earlier.¹ The Euro Area economy expanded by 1.3% year-on-year in the final quarter of 2025. Ireland posted the strongest growth at 6.7%, followed by Spain (2.6%), Lithuania (2.5%), Portugal (1.9%) and the Netherlands (1.8%).² Annual inflation in the Euro Area was confirmed at 1.7% in January,³ while the unemployment rate in the Euro Area decreased to 6.2% in December.⁴

The U.S. economy expanded an annualized 1.4% in Q4 2025. Exports fell 0.9% after surging 9.6% in Q3, and imports declined (-1.3% vs -4.4%). For 2025, the U.S. economy expanded 2.2%.⁵ The annual inflation rate in the U.S. slowed to 2.4% in January,⁶ while the U.S. unemployment rate ticked down to 4.3%.⁷ The U.S. trade deficit widened to $70.3 billion in December 2025. Exports were down 1.7%, led by a fall in nonmonetary gold. Imports were up 3.6%. For 2025, the U.S. recorded a $901.5 billion trade deficit. Deficits narrowed with the E.U. and China, but widened with Mexico, Vietnam, and Taiwan.⁸ Canadian GDP declined by 0.2% in the fourth quarter of 2025. The contraction was driven by a withdrawal of business inventories. Increased capital investment was driven by government investment in weapons systems. On an annual basis, the Canadian GDP grew by 1.7% in 2025.⁹ The headline inflation rate in Canada eased to 2.3% in January. Deflation picked up for transportation due to the 16.7% plunge in gasoline prices,¹⁰ while the unemployment rate in Canada fell to 6.5%.¹¹ Canada’s trade deficit narrowed to C$1.31 billion in December.  Exports rose 2.6% month over month. These gains were partly offset by a 1.0% decline in energy product exports. Canada’s surplus with the U.S. narrowed to C$5.7 billion, while the deficit with countries narrowed to C$7.0 billion.¹²

It was a rollercoaster start to the year for U.S. equities. The S&P 500 closed the month up 1.5%, despite a pullback during the final two trading days of the month. The S&P Mid Cap 400 and S&P Small Cap 600 advanced 4.1% and 5.6%, respectively. Major Canadian equity indices finished the month with mixed results. The S&P/TSX Composite increased 0.8%. Canadian sectors posted mixed performance for the month, with Energy leading, up 10.6%, while Information Technology fell 17.6%. The S&P Europe 350 rose 3.3% to start the year. Asia Pacific equities began the year on a strong footing, with the S&P Pan Asia BMI up 7.2% in January.

In February we reduced exposure to U.S. Equities in the Moderate Growth, Growth, and Aggressive Growth models and added that exposure to Canadian Equities. We continue to believe that Canada is managing the U.S. tariff uncertainty relatively well, replacing some U.S. exports with contracts in Europe and abroad. Gold is held across all models as a long-term strategic asset, playing a role as an effective hedge against the heightened geopolitical uncertainty and market volatility. Gold has historically been negatively correlated with the dollar. 

For the U.S. economy, stagflation risk is higher because of limited policy flexibility from the Federal Reserve. During an energy shock, the Fed may lower short-term interest rates to mitigate inflationary pressures. But significant rate cuts this year, as inflation has remained above the Fed’s preferred 2% target, remain unlikely.  We continue to monitor the global selloff of U.S. treasuries and the growing holdings of gold. Our approach to portfolio management is nimble, opportunistic, and deliberate in identifying asset classes that are best placed to generate returns in a new world order. Our focus is on protecting portfolios from downside risk, and we believe that our investment process is working to achieve that goal.

Deborah Frame, President and CIO

Drew Millard, Portfolio Manager

¹ Trading Economics. China Inflation. February 11, 2026.

² Trading Economics. EU GDP. February 13, 2026.

³ Trading Economics. EU Inflation. February 25, 2026.

⁴ Trading Economics. EU Unemployment. January 30, 2026.

⁵ Trading Economics. U.S. GDP. February 20, 2026.

⁶ Trading Economics. U.S. Inflation. February 13, 2026.

⁷ Trading Economics. U.S. Unemployment. February 11, 2026.

⁸ Trading Economics. U.S. Trade. February 17, 2026.

⁹ Trading Economics. Canada GDP. February 27, 2026.

¹⁰ Trading Economics. Canada Inflation. February 17, 2026.

¹¹ Trading Economics. Canada Unemployment. February 6, 2026.

¹² Trading Economics. Canada Trade. February 19, 2026.

Index return data from Bloomberg and S&P Dow Jones Indices Index Dashboard: U.S., Canada, Europe, Asia, Fixed Income. January 31, 2026. Index performance is based on total returns and expressed in the local currency of the index.

In December, the geopolitical and geoeconomic environment led to a weaker U.S. dollar and marginally lower interest rates. This environment has resulted in a broader push for portfolio diversification amid lacklustre bond returns and concerns of volatility in equity markets. Investment demand for gold has surged across all regions, while central banks continued their buying spree – with demand well above average, even if below the records seen in the previous three years. In December we maintained our twelve-month forward outlook of three months of Stagnation (U.S. Real GDP growth less than 2.5%) followed by nine months of Recession (negative GDP growth) over the next twelve- month period.

China’s annual inflation rate picked up to 0.7% in November 2025,¹ while surveyed urban unemployment stood at 5.1% in November.² China’s trade surplus topped a record $1 trillion in the first 11 months of the year despite a deepening slump in shipments to the U.S. with exports rising 5.4% while imports shrank 0.6%.³ Eurozone GDP growth for the third quarter of 2025 was revised slightly higher to 0.3%, up from the preliminary estimate of 0.2%.⁴ The annual inflation rate in the Eurozone was revised down to 2.1% in November.⁵ The Eurozone’s trade surplus widened sharply to €18.4 billion in October 2025 from €7.1 billion a year earlier, as exports increased while imports fell. By country, imports declined sharply from China (-34.1%) and India (-3.0%), while rising from the U.S. (+19.5%), the UK (+16.7%) and Switzerland (+2.3%).⁶

The GDP in the U.S. advanced an annualized 4.3% in Q3 2025.⁷ The annual inflation rate in the U.S. came in at 2.7% in December 2025. The energy index increased 4.2%.⁸ The U.S. unemployment rate increased to 4.6% in November from 4.4% in September.⁹ The U.S. recorded a trade deficit of $52.8 billion in September 2025, the lowest since June 2020. Exports jumped 3% to $289.3 billion, the second-highest level on record.¹⁰ Canadian GDP rose by 0.6% on quarter in the third quarter of 2025, following a revised 0.5% contraction in the previous period. The expansion was driven by a strengthening trade balance, as imports dropped (-2.2%) and exports edged up (+0.2%).¹¹ Headline inflation  in Canada held at 2.2% in November, unchanged from October,¹² while the unemployment rate fell to 6.5% in November from 6.9% in the previous month.¹³ Canada’s trade swung to a surplus of C$0.15 billion in September 2025 from a C$6.3 billion deficit the month before. Exports rose 6.3% month on month. Exports to the U.S. were up 4.6% in September. Meanwhile imports fell 4.1%. Those flows narrowed deficits with countries other than the U.S. and widened Canada’s surplus with the U.S. from C$6.0 billion in August to C$8.6 billion in September.¹⁴

A record-long government shutdown, concerns over elevated Big Tech valuations, and hawkish sentiment from the Fed initially rattled U.S. equity markets in November. A sharp rise in expectations for a December rate cut led to a strong turnaround for the S&P 500 in the last week of November. As a result, the index finished November up 0.3%. Smaller caps outperformed versus their large-cap peers, with the S&P Mid Cap 400 and S&P Small Cap 600 up 2.1% and 2.7%, respectively. Major Canadian equity indices finished the month on the upside with the S&P/TSX Composite up 3.9%. In Europe, the S&P Europe 350 gained 1%. These gains run counter to the performance of Global Equity indices. After seven consecutive months of increase, Pan Asia equities took a breather in November, The S&P Pan Asia BMI (USD) declined 1.7%, led down by emerging markets.

In December we reduced exposure to Mid Term Bonds and added that exposure to Canadian Equities. We continue to believe that Canada is managing the U.S. tariff uncertainty relatively well, replacing some U.S. exports with contracts in Europe and abroad. This is evidenced in the December Canadian economic data. Gold is held across all models as a long-term strategic asset, playing a role as an effective hedge against the heightened geopolitical uncertainty and market volatility. Gold has historically been negatively correlated with the dollar. The combined effect of heightened geopolitical risk and U.S. dollar weakness contributed to Gold’s December record high.

Concerns about a softening U.S. labour market and stubbornly high inflation are mounting. Geopolitical frictions continue to simmer but remain close to boiling. Our approach to portfolio management is nimble, opportunistic, and deliberate in identifying asset classes that are best placed to generate returns in a new world order. Our focus is on protecting portfolios from downside risk, and we believe that our investment process is working to achieve that goal.

Deborah Frame, President and CIO

Drew Millard, Portfolio Manager

¹ Trading Economics. China Inflation. December 10, 2025.

² Trading Economics. China Unemployment. December 15, 2025.

³ Trading Economics. China Trade. December 8, 2025.

⁴ Trading Economics. Europe GDP. December 5, 2025.

⁵ Trading Economics. Europe Inflation. December 7, 2025.

⁶ Trading Economics. Europe Trade. December 16, 2025.

⁷ Trading Economics. U.S. GDP. December 23, 2025.

⁸ Trading Economics. U.S. Inflation. December 18, 2025.

⁹ Trading Economics. U.S. Unemployment. December 16, 2025.

¹⁰ Trading Economics. U.S. Trade. December 18, 2025.

¹¹ Trading Economics. Canada GDP. November 28, 2025.

¹² Trading Economics. Canada Inflation. December 15, 2025.

¹³ Trading Economics. Canada Unemployment. December 5, 2025.

¹⁴ Trading Economics. Canada Trade. December 11, 2025.

Index return data from Bloomberg and S&P Dow Jones Indices Index Dashboard: U.S., Canada, Europe, Asia, Fixed Income. November 30, 2025. Index performance is based on total returns and expressed in the local currency of the index.

Sweeping tariffs across a wide-ranging group of trading partners threaten to hobble global growth and push up prices for consumers and businesses. The effective tariff rate in the United States has risen to its highest level in nearly a century. Households are reining in spending given the prospect for higher prices, while businesses are lowering investment and hiring plans. Renewed U.S.-China trade tensions underscore vulnerabilities in China’s export-driven economy, with President Trump threatening tariffs of up to 100% on Chinese goods. Central banks have been adding to their bullion reserves and investors have sought refuge in gold this year amid the expanding trade war, record U.S. debt levels, and growing encroachment on the independence of the Federal Reserve. In October we maintained our twelve-month forward outlook of three months of Stagnation (U.S. Real GDP growth less than 2.5%) followed by nine months of Recession (negative GDP growth) over the next twelve- month period.

China’s GDP grew 1.1% quarter-on-quarter in Q3 2025.¹ China’s surveyed unemployment rate fell to 5.2% in September 2025,² while China’s trade surplus came in at USD 90.45 billion in September, as Chinese producers continued to diversify into new markets beyond the U.S.³ The Eurozone economy expanded by 0.2% quarter-on-quarter in Q3 2025, up from 0.1% in Q2.⁴ Inflation in the Euro Area increased to 2.2% in September,⁵ while seasonally adjusted unemployment  edged up to 6.3% in August. Among the bloc’s largest economies, Spain (10.3%), France (7.5%), and Italy (6%) continued to see the highest jobless rates.⁶ The Euro Area trade surplus with the U.S. shrank to €5.8 billion from €14.2 billion, driven by a 22.3% drop in exports and a modest 0.6% decline in imports.⁷

U.S. GDP growth, unemployment, and trade statistics are unavailable due to the government shutdown. The annual core consumer price inflation rate in the United States ticked down to 3% in September 2025 from 3.1% in each of the previous two months.⁸ The annual inflation rate in Canada rose to 2.4% in September from 1.9% in the previous month,⁹ while unemployment held steady at 7.1%.¹⁰ Canada’s trade deficit widened to C$6.3 billion in August of 2025 from C$3.8 billion in the previous month. Imports from the U.S. fell by 1.4% and Canada’s surplus with the U.S. dropped from C$7.4 billion in July to C$6.4 billion in August.¹¹

While the U.S. equity markets closed amid government shutdown concerns, it was a stellar Q3 due to optimism surrounding Fed rate cuts, tech strength, and robust consumer spending, with the S&P 500 up 8.1%. The rally broadened to mid and small caps, with the S&P Mid Cap 400 up 5.6% and the S&P Small Cap 600 up 9.1%.  Major Canadian equity indices finished the quarter on the upside. The S&P/TSX Composite increased 12.5%. The S&P/TSX Global Gold Index increased 48.4%. The headline S&P Europe 350 continued its upward trend. The U.K. was Q3’s best-performing country, contributing more than a third of the index’s quarterly gain. The S&P Pan Asia BMI (USD) recorded a 9.4% quarterly gain. The S&P Asia 50, which comprises 50 leading blue-chip companies in Hong Kong, Korea, Singapore and Taiwan, soared 17.8% in Q3. Chinese equities rallied both onshore and offshore, with the S&P China 500 posting an impressive 22.1% gain in Q3.

In October we maintained all exposures held in September. The reduction in exposure to the S&P 500 and increase in exposure to the Canadian TSX equally across all models in August continues to pay off. We maintain our view that Canada is managing the U.S. tariff uncertainty relatively well, replacing some U.S. exports with contracts in Europe and abroad. Gold is held across all models as a long-term strategic asset, playing a role as an effective hedge against the heightened geopolitical uncertainty and market volatility. Gold has historically been negatively correlated with the dollar. The safe-haven status of gold has been elevated as Trump’s trade agenda and budget deficits shake trust in sovereign debt and currencies, particularly the US dollar. Because bullion is priced in dollars, when the greenback weakens, gold becomes cheaper for holders of other currencies. In mid-September, the dollar fell to its weakest level in more than three years against other major currencies. Central banks have become increasingly active in global gold markets.

The lack of transparency of U.S. economic data resulting from the U.S. government shutdown is cause for caution around the U.S. growth outlook. Though a weaker foreign exchange rate may be good for rebalancing the trade deficit—by making American exports cheaper and more competitive and deterring spending on costlier import, it is not good for household wealth.  Our approach to portfolio management is nimble, opportunistic, and deliberate in identifying asset classes that are best placed to generate returns in a new world order. Our focus is on protecting portfolios from downside risk, and we believe that our investment process is working to achieve that goal.

Deborah Frame, President and CIO

Drew Millard, Portfolio Manager

¹ Trading Economics. China GDP. October 20, 2025.

² Trading Economics. China Unemployment. October 20, 2025.

³ Trading Economics. China Trade. October 13, 2025.

⁴ Trading Economics. EU GDP. October 30, 2025.

⁵ Trading Economics. EU Inflation. October 17, 2025.

⁶ Trading Economics. EU Unemployment. October 2, 2025.

⁷ Trading Economics. EU Trade. October 16, 2025.

⁸ Trading Economics. U.S. Inflation. October 24, 2025.

⁹ Trading Economics. Canada Inflation. October 21, 2025.

¹⁰ Trading Economics. Canada Unemployment. October 10, 2025.

¹¹ Trading Economics. Canada Trade. October 7, 2025.

Index return data from Bloomberg and S&P Dow Jones Indices Index Dashboard: U.S., Canada, Europe, Asia, Fixed Income. September 30, 2025. Index performance is based on total returns and expressed in the local currency of the index.

U.S. tariffs implemented this year were sold to the American public as being paid by foreign exporters, recharging U.S. manufacturing, and narrowing the size of U.S. trade and fiscal deficits. Early data suggests tariffs are not achieving those goals. U.S. Job growth has decelerated—including in the trade-sensitive manufacturing sector that was meant to benefit from tariffs. In the case of Canada, the blanket International Emergency Economic Powers Act (IEEPA) tariff on Canada impacts a small share of exports that are not compliant with the CUSMA free trade agreement. While sector specific tariffs including on steel and aluminum products remain, more than 90% of Canadian exports continue to access the U.S. market duty free. In August we maintained our twelve-month forward outlook of three months of Stagnation (U.S. Real GDP growth less than 2.5%) followed by nine months of Recession (negative GDP growth) over the next twelve- month period.

China’s surveyed unemployment rate rose to 5.2% in July 2025.¹ China’s trade surplus came in at USD 98.24 billion in July as exports rose 7.2% year-on-year, while imports increased by 4.1%. China’s trade surplus with the U.S. declined in June, as both exports and imports with the U.S. declined, falling 21.7% and 18.9%, respectively.² The headline annual inflation rate in the Eurozone was unchanged from the prior month at 2% in July of 2025. This marks the second consecutive month that inflation has aligned with the European Central Bank’s official target,³ while the unemployment rate in the Euro Area remained unchanged at 6.2%.⁴

The U.S. economy grew an annualized 3% in Q2 2025, rebounding from a 0.5% contraction in Q1, when businesses and consumers rushed to stockpile goods ahead of expected price increases following a series of tariff announcements.⁵ The U.S. annual inflation rate remained at 2.7% in July 2025,⁶ while the U.S. unemployment rate rose slightly to 4.2% in July.⁷ The U.S. trade deficit in goods narrowed sharply in June 2025 as imports fell 4.6% from the prior month, while exports edged down 0.7%.⁸ Canadian GDP contracted by 1.6% on a seasonally adjusted annualized rate in the second quarter of 2025, reversing from the 2% growth rate in the previous period. The report shows some evidence that the trade damage isn’t rapidly creeping through the broader economy. The decline was headlined by lower exports and weaker business investment in machinery and equipment. Exports fell 27% on an annualized basis while business investment contracted 10.1% after rising just 1.1% in the first quarter, highlighting the mounting pessimism facing Canadian firms as they contend with the uncertain and frequent changes to U.S. levies and policy.⁹ The annual inflation rate in Canada eased to 1.7% in July 2025,¹⁰ while the unemployment rate remained unchanged from the previous month at 6.9% in July of 2025.¹¹ Canada posted a seasonally adjusted trade deficit of C$5.9 billion in June as imports expanded by 1.4%. Exports rose by 0.9%. Exports to the United States were 3.1% higher from the previous month but remained 12.5% lower annually.¹² 

Despite ongoing tariff-related trade tensions and macroeconomic uncertainty affecting markets, U.S. equities maintained their upward momentum in July, with the S&P 500 increasing by 2.2%.  The S&P Mid Cap 400 and S&P SmallCap 600 concluded July with increases of 1.6% and 0.9%, respectively. Canadian equity indices finished the month on the upside. The S&P/TSX Composite increased 1.7%. The Europe 350 began the second half of 2025 on a positive note, gaining 1% in July. Most countries contributed positively to the S&P Europe 350, with the notable laggard of Denmark. Pan Asian equities sustained their upward trajectory in July, despite a weakening of currencies against the US dollar. The USD denominated S&P Pan Asia BMI closed the month up 1.1%.

In August, we reduced exposure to the S&P 500 and added that exposure to the Canadian TSX equally across all models, reflecting our view that Canada is managing the U.S. tariff uncertainty, replacing some U.S. exports with contracts in Europe and abroad. We maintained exposure to investment-grade mortgage-backed pass-through securities issued and/or guaranteed by U.S. government agencies. Gold is held across all models as a long-term strategic asset, playing a role as an effective hedge against the heightened geopolitical uncertainty and market volatility.

Demand for foreign goods in the U.S. is expected to hold up in the near term due to a lack of domestic alternatives. Concurrently, U.S. trading partners are looking to other countries for new opportunities. Canada’s 15 free trade agreements (FTAs), covering 51 countries and over 1.5 billion consumers will be a high priority focus, with more deals under negotiation to expand its global network. Our approach to portfolio management is nimble, opportunistic, and deliberate in identifying asset classes that are best placed to generate returns in a new world order. Our focus is on protecting portfolios from downside risk, and we believe that our investment process is working to achieve that goal.

Deborah Frame, President and CIO

Drew Millard, Portfolio Manager

¹ Trading Economics. China Unemployment. August 15, 2025.

² Trading Economics. China Inflation. August 7, 2025.

³ Trading Economics. EU Inflation. August 20, 2025.

⁴ Trading Economics. EU Unemployment. July 31, 2025.

⁵ Trading Economics. U.S. GDP. July 30, 2025.

⁶ Trading Economics. U.S. Inflation. August 12, 2025.

⁷ Trading Economics. U.S. Unemployment. August 1, 2025.

⁸ Trading Economics. U.S. Trade. July 29, 2025.

⁹ Trading Economics. Canada GDP. August 29, 2025.

¹⁰ Trading Economics. Canada Inflation. August 19, 2025.

¹¹ Trading Economics. Canada Unemployment. August 8, 2025.

¹² Trading Economics. Canada Trade. August 5, 2025.

Index return data from Bloomberg and S&P Dow Jones Indices Index Dashboard: U.S., Canada, Europe, Asia, Fixed Income. July 31, 2025. Index performance is based on total returns and expressed in the local currency of the index.

Economic and trade policy uncertainties have led to reallocation of global capital, causing a weaker U.S. dollar, rising gold prices, and U.S. Treasury bond yields widening. Consumer confidence and business investment intentions have been affected by economic and trade policy uncertainty. This in turn has triggered a reallocation of global capital out of the U.S. with global investors seeking out alternative safe-haven assets to U.S. Treasuries, supporting the gold market. Canada’s close economic ties to the U.S. have been negatively impacted. On June 27th President Trump announced that the United States would terminate all trade discussions with Canada, over the country’s plan to begin collecting digital services taxes from U.S. technology giants. In June we maintained our twelve-month forward outlook of six months of Stagnation (U.S. Real GDP growth less than 2.5%) followed by six months of Recession (negative GDP growth) over the next twelve- month period to three months of Stagnation and nine months of Recession.

China’s consumer prices dropped by 0.1% year over year in May 2025, the fourth straight month of consumer deflation, highlighting challenges from ongoing trade risks with the U.S., sluggish domestic demand, and concerns over job stability.¹ Unemployment in China decreased to 5% in May.² China’s trade surplus widened sharply to USD 103.22 billion in May, up from USD 81.74 billion a year earlier, as exports rose while imports dropped by 3.4%.³ The Eurozone economy grew by 0.6% in the first quarter of 2025, driven by Ireland’s exceptional 9.7%.⁴ Eurozone consumer price inflation was confirmed at 1.9% year-on-year in May, down from 2.2% in April.⁵ The unemployment rate in the Euro Area edged down to 6.2% in April. Among the bloc’s largest economies, Germany (3.6%) and the Netherlands (3.8%) reported the lowest unemployment rates, while Spain (10.9%), France (7.1%), and Italy (5.9%) continued to post higher levels.⁶

The U.S. economy contracted at an annualized rate of 0.5% in Q1 2025, the first quarterly contraction in three years. The weaker GDP figure was largely driven by significant downward revisions to consumer spending and exports. The sharp rise in imports reflected a rush by businesses and consumers to stockpile goods ahead of anticipated price increases stemming from a series of tariff announcements. Federal government spending dropped 4.6%, the steepest decline since Q1 2022.⁷ The annual inflation rate in the U.S. rose for the first time in four months to 2.4% in May.⁸ The U.S. unemployment rate held steady at 4.2% in May.⁹ The U.S. trade gap narrowed sharply to $61.6 billion in April. The biggest trade deficit was recorded with China ($-19.7 billion), although it decreased sharply from a $24.2 billion gap in March.¹⁰ Canadian GDP expanded by 0.5% from the previous quarter in the first three months of 2025. The concentration of growth in net foreign demand and inventory accumulation was supported by firms front-running tariffs from the U.S. on aluminum, steel, and auto industries instead of core economic strength.¹¹ The annual inflation rate in Canada was at 1.7% in May,¹² while the unemployment rate in Canada rose to 7.0%, signaling that businesses may be starting to feel the impact of tariffs imposed by the United States.¹³ Sales to the U.S. contracted 15.7% while exports to countries other than the United States rose 2.9%.¹⁴

U.S. equities staged a recovery in May, thanks to optimism surrounding easing tariff tensions, with the S&P 500® up 6.3%. Although the fiscal deficit, inflation concerns, and ongoing geopolitical uncertainties continue to linger, volatility declined with the S&P Mid Cap 400® and S&P SmallCap 600® both up 5.4% and 5.2% respectively. Following a disappointing 20-year Treasury note auction and ongoing concerns about the fiscal deficit, long term Treasury yields surged. Major Canadian equity indices finished the month on the upside. The S&P/TSX Composite increased 5.6%. The S&P Europe 350® gained 4.9%. The U.K. was the biggest positive contributor to the S&P Europe 350, with +1.03% contribution. Pan Asia equities witnessed a strong rally in May as tariff-related tensions eased. The USD denominated S&P Pan Asia BMI recorded a 5.0% gain, bolstered by the strengthening of Asian currencies against the US dollar.

In June, we maintained exposure to investment-grade mortgage-backed pass-through securities issued and/or guaranteed by U.S. government agencies. Gold is held across all models as a long-term strategic asset, playing a role as an effective hedge against the heightened geopolitical uncertainty and market volatility. Central bank buying is a big factor in gold’s strength as gold’s performance in periods of crisis is at play. For about a decade, as real interest rates rose, gold was inversely correlated. Since 2022, as real rates rose, that inverse correlation has been counterbalanced, supported by investors seeking to mitigate a variety of risks and by central bank buying. We maintained exposure across all models to U.S. Large Caps.

The impact on inflation from tariffs has likely been slow to show up because of lags between when imports face tariffs, and when an imported good hits store shelves. Many final goods sold in stores through May were likely ordered pre-tariffs. The pass-through of tariffs therefore will only become evident over the next 2-3 months. Our approach to portfolio management is nimble, opportunistic, and deliberate in identifying asset classes that are best placed to generate returns in a new world order. Our focus is on protecting portfolios from downside risk, and we believe that our investment process is working to achieve that goal.

Deborah Frame, President and CIO

Drew Millard, Portfolio Manager

¹ Trading Economics. China Inflation. June 9, 2025.

² Trading Economics. China Unemployment. June 16, 2025.

³ Trading Economics. China Trade. June 9, 2025.

⁴ Trading Economics. EU GDP. June 6, 2025.

⁵ Trading Economics. EU Inflation. June 18, 2025.

⁶ Trading Economics. EU Unemployment. June 3, 2025.

⁷ Trading Economics. U.S. GDP. June 26, 2025.

⁸ Trading Economics. U.S. Inflation. June 11, 2025.

⁹ Trading Economics. U.S. Unemployment. June 6, 2025.

¹⁰ Trading Economics. U.S. Trade. June 5, 2025.

¹¹ Trading Economics. Canada GDP. May 30, 2025.

¹² Trading Economics. Canada Inflation. June 24, 2025.

¹³ Trading Economics. Canada Unemployment. June 6, 2025.

¹⁴ Trading Economics. Canada Trade. June 5, 2025.

Index return data from Bloomberg and S&P Dow Jones Indices Index Dashboard: U.S., Canada, Europe, Asia, Fixed Income. May 31, 2025. Index performance is based on total returns and expressed in the local currency of the index.