Market Recap* – Week of Nov 17

1. What happened in the markets?

Canadian equities moved slightly lower because domestic inflation cooled further which reinforced concerns about slowing underlying demand. The softer print increased expectations that the Bank of Canada will remain cautious on any near-term policy changes which added to a defensive tone. Political uncertainty early in the week also weighed on risk appetite. Confidence improved only after the federal budget passed but the recovery was not strong enough to offset the broader drift lower.

US equities declined because the market was digesting the return of delayed economic data following the government shutdown. Investors waited for upcoming labour and activity indicators to clarify the Federal Reserve’s direction which kept sentiment restrained. Concerns grew that the data backlog could distort short-term readings and create noise in policy expectations. Momentum in large technology and AI-related names also cooled which contributed to the week’s negative finish.

Canadian fixed income ended marginally lower because bond prices slipped slightly while investors waited for clearer economic signals from the Bank of Canada. The market lacked strong catalysts which kept trading activity contained and prevented any meaningful upward movement in prices. Some softness in global bond markets also added mild pressure. As a result, overall returns for the week were lower. However, the move was small and overall stability for income-focused investors was largely maintained.

Money market conditions were stable because expectations for short-term policy rates in both Canada and the US shifted only slightly. The gradual release of US macro data created some hesitation among traders but did not meaningfully alter rate-cut timing assumptions. Liquidity conditions remained solid. Overall, the market continued to price a steady near-term environment.

The Canadian dollar weakened because softer domestic inflation weighed on rate expectations which supported the US dollar. Early-week pressure reflected concerns about the strength of Canada’s growth backdrop. Sentiment improved somewhat after political uncertainty cleared which limited the size of the decline. Even so, broad USD strength remained the dominant driver through the week.

2. What does it mean for Embark Funds?

Asset class	Change	Impact on cohorts
Canadian Equities	↓	Slightly negative for younger cohorts with higher equity exposure. Softer inflation and mixed growth signals kept returns muted.
U.S. Equities	↓	Mildly negative for growth-oriented cohorts. The pullback in large technology names and caution ahead of delayed economic data weighed on equity-heavy younger portfolios.
Bonds	↓	Slightly negative for older cohorts because lower bond prices resulted in modest weekly losses. The move was small so overall stability for income-focused investors was largely maintained.
Money Market	→	Neutral for older cohorts. Stable pricing and unchanged short-term expectations kept returns predictable and steady.
Canadian Dollar	↓ CAD	Beneficial for diversified portfolios. A softer CAD modestly lifted unhedged foreign asset returns which helped younger and balanced cohorts.