| Index | Close | Week | Year to date |
|---|---|---|---|
| S&P/TSX Composite | 31,311.41 | -0.23% | 26.62% |
| Dow Jones Industrial Average | 47,954.99 | 0.50% | 12.72% |
| S&P 500 Index | 6,870.40 | 0.31% | 16.81% |
| Nasdaq Composite | 23,578.13 | 0.91% | 22.10% |
| 10-year Canadian Bond Yield | 3.42% | 0.28% | 0.19% |
| 10-year U.S. Treasury Yield | 4.14% | 0.12% | -0.44% |
| WTI Crude Oil (U.S.$ per barrel) | 60.08 | 2.61% | -16.23% |
| Canadian Dollar | US$0.72 | 0.85% | 3.82% |
Prime Rate 4.45 % |
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Weekly performance ending December 5, 2025.
Sources: Morningstar Direct, Bank of Canada, U.S. Department of the Treasury and CME Group
2026 outlook
Our Investment Analyst team provides expert economic insight, portfolio construction and recommendations to support our wealth management services. Here are their key insights on the economic landscape heading into 2026.
How do you think the Canadian economy will fare in 2026?
We expect the Canadian economy to grow modestly in 2026 as the country continues adjusting to a slower global economic environment. Lower interest rates will help households and small businesses. Population growth will continue supporting housing, services and consumer spending, although high home costs will remain a concern.
A key theme in 2026 will be Canada’s push to reduce its dependence on the U.S. economy. Prime Minister Mark Carney’s proposed trade and investment strategies aim to broaden Canada’s economic ties, attract new capital and strengthen industries such as clean technology, critical minerals and advanced manufacturing. If these plans lead to faster project approvals and more private-sector investment, Canada could see stronger productivity growth over time. The 2025 Federal Budget is more focused on long-term infrastructure development than short-term stimulus.
Still, Canada enters 2026 with familiar challenges: weak productivity, aging infrastructure and slow business investment. The U.S. will remain Canada’s largest trading partner, but efforts to build deeper links with Europe and Asia may help reduce risk. Overall, the economy should post slow but steady growth, with comparatively better conditions than the last two years.
Is inflation behind us? Can we expect more interest-rate reductions next year?
Inflation has fallen from its peak in 2022. Food and energy prices remain unpredictable, but underlying inflation pressures have eased. We’ve seen supply chains normalize, wage growth slow and demand cool. Home costs are still elevated, but they should moderate as housing supply increases and interest rates hold at lower levels.
Policy-makers continue with a cautious approach, knowing that the last phase of inflation reduction often moves slowly, and global risks – such as energy shocks or geopolitical tensions – could stall progress. Core measures of inflation remain higher than the headline numbers. Since June 2024, the Bank of Canada has lowered interest rates by 2.75%. We expect another 0.50% in cuts by the end of 2026. If the economy shows more signs of weakness, the Bank may cut rates even further. Similarly, if the incoming data shows fewer signs of weakness, the Bank may pause further rate cuts.
Even if more cuts happen, interest rates are unlikely to return to the ultra-low levels seen before the pandemic. The Bank of Canada wants to avoid stimulating the economy too quickly, aiming to keep financial conditions balanced. Overall, inflation is mostly behind us, but policy-makers will move carefully to avoid reigniting price pressures.
Is the AI bubble about to burst or will AI continue to drive stock market growth in 2026?
AI enthusiasm drove global stock markets to record highs in 2025, led by strong demand for chips, data centres and cloud services. However, there are risks, and media reports of a potential bubble are increasing.
AI companies have been investing in one another, raising concerns that their stock valuations are artificially high. Even though spending on AI is at an all-time high, only a few companies are making profits so far. The high costs of building and running AI systems may not be fully appreciated when judging how well AI can be used in business to deliver profits. The excitement around AI could slow down as investors look for proof from financial statements that AI can help them make more money.
December 8 to 12, 2025
Bank of Canada and U.S. Federal Reserve interest-rate announcements (December 10):
Hope that the Federal Reserve will cut rates has buoyed North American equity markets in recent weeks. The Bank of Canada is more likely to hold rates steady. Stay prepared by reviewing these links to the 2026 policy update schedules for the Bank of Canada and the U.S Federal Reserve.
More important dates
- December 15: Final Co-operators Investment Update of 2025 (weekly updates resume January 12, 2026)
- December 25: North American markets closed for Christmas Day
- December 26: Canada’s TSX closed for Boxing Day
- January 1: North American markets closed for New Year’s Day
The commentary in this report is based on current market conditions and market media sources available to the public and may change without prior warning at any time. The forecasts provided herein are not guarantees of future performance and include risks, uncertainty and assumptions. While Co-operators Life Insurance Company (“Co-operators”) believes these assumptions are reasonable, there is no guarantee they will be confirmed. This report is not a guarantee of future investment performance, nor should undue reliance be placed on this report. This report is provided as a general source of information for a specific point in time and should not be considered solicitation to buy or sell any investment. Nothing contained in this report constitutes investment, legal, tax or other advice. The content in this report should not be relied upon in making an investment or other decision, and individuals should obtain relevant and specific professional advice and read the terms and conditions contained in the relevant offering documents carefully before any investment decision is made. Co-operators is not responsible for any loss or damage as a result of reliance on the information contained in this report. Co-operators makes no representations or warranties as to the information contained herein and does not guarantee its accuracy, timeliness, completeness or usefulness.
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