Market Recap* – Week of December 8

1. What happened in the markets?

Canadian equities moved higher over the period, supported by stable inflation data and a resilient labour market. Recent jobs data showed employment conditions remained firm, reinforcing confidence that economic growth is holding up without adding new inflation pressure. Together, steady inflation and solid employment supported expectations that interest rates can remain on hold, which helped lift equity sentiment.

On December 10, 2025, the U.S. Federal Reserve implemented its third interest rate cut of the year, a 25-basis-point reduction that brought the benchmark rate to a range of 3.5% to 3.75%. Despite this monetary easing, U.S. equity markets struggled last week as persistent anxiety over high artificial intelligence (AI) valuations triggered a significant tech-driven selloff. The “Magnificent Seven” and the Nasdaq were particularly hard hit, underperforming the broader market as investors grew wary of heavy AI spending and the sustainability of record-high prices.

Canadian fixed income prices edged higher as inflation remained contained and interest rate expectations stayed stable. The combination of steady domestic inflation and easing policy signals from the U.S. helped support bond prices and limited volatility.

Money market returns were flat over the period. With Canadian policy rates unchanged and near-term expectations stable, short-term instruments continued to deliver steady returns without meaningful price movement.

The Canadian dollar strengthened against the U.S. dollar. The move reflected a softer U.S. dollar following the Federal Reserve’s rate cut, alongside steady Canadian inflation that supported confidence in the loonie.

2. What does it mean for Embark Funds?

Asset class	Change	Impact on cohorts
Canadian Equities	↑	Positive for younger cohorts with higher equity exposure; supported by the release of inflation data showing price pressures remained stable.
U.S. Equities	↓	Slightly negative for growth-oriented cohorts. The S&P 500 declined as markets consolidated after recent gains.
Bonds	↑	Bond gains especially benefited older cohorts focused on income and stability. Canadian fixed income prices edged higher as stable inflation and a steady policy outlook limited pressure on bond markets.
Money Market	→	Money market returns were flat over the period, reflecting unchanged short-term interest rate expectations and stable policy conditions in Canada.
Canadian Dollar	↑ CAD	A stronger Canadian dollar slightly reduced the value of U.S. dollar-denominated assets when translated back into Canadian dollars, creating a modest currency headwind for portfolios with U.S. exposure.